Correlation Between Oakmark Fund and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Oakmark Fund and Franklin Federal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Oakmark Fund and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark Fund Institutional and Franklin Federal Limited Term, you can compare the effects of market volatilities on Oakmark Fund and Franklin Federal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Oakmark Fund with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark Fund and Franklin Federal.
Diversification Opportunities for Oakmark Fund and Franklin Federal
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Oakmark and Franklin is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Fund Institutional and Franklin Federal Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Lim and Oakmark Fund is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Oakmark Fund Institutional are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Lim has no effect on the direction of Oakmark Fund i.e., Oakmark Fund and Franklin Federal go up and down completely randomly.
Pair Corralation between Oakmark Fund and Franklin Federal
Assuming the 90 days horizon Oakmark Fund Institutional is expected to generate 7.89 times more return on investment than Franklin Federal. However, Oakmark Fund is 7.89 times more volatile than Franklin Federal Limited Term. It trades about 0.11 of its potential returns per unit of risk. Franklin Federal Limited Term is currently generating about 0.17 per unit of risk. If you would invest 11,650 in Oakmark Fund Institutional on September 2, 2024 and sell it today you would earn a total of 4,652 from holding Oakmark Fund Institutional or generate 39.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakmark Fund Institutional vs. Franklin Federal Limited Term
Performance |
| Timeline |
| Oakmark Fund Institu |
| Franklin Federal Lim |
Oakmark Fund and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark Fund and Franklin Federal
The main advantage of trading using opposite Oakmark Fund and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Fund position performs unexpectedly, Franklin Federal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Federal will offset losses from the drop in Franklin Federal's long position.| Oakmark Fund vs. Alpsalerian Energy Infrastructure | Oakmark Fund vs. Franklin Natural Resources | Oakmark Fund vs. Fidelity Advisor Energy | Oakmark Fund vs. Energy Services Fund |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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