Correlation Between Oakmark International and Small Cap
Can any of the company-specific risk be diversified away by investing in both Oakmark International and Small Cap 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 International and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark International Fund and Small Cap Value, you can compare the effects of market volatilities on Oakmark International and Small Cap 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 International with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Small Cap.
Diversification Opportunities for Oakmark International and Small Cap
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Oakmark and Small is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Fund and Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value and Oakmark International 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 International Fund are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Oakmark International i.e., Oakmark International and Small Cap go up and down completely randomly.
Pair Corralation between Oakmark International and Small Cap
Assuming the 90 days horizon Oakmark International Fund is expected to under-perform the Small Cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Oakmark International Fund is 1.26 times less risky than Small Cap. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Small Cap Value is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,733 in Small Cap Value on August 29, 2024 and sell it today you would earn a total of 225.00 from holding Small Cap Value or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakmark International Fund vs. Small Cap Value
Performance |
| Timeline |
| Oakmark International |
| Small Cap Value |
Oakmark International and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark International and Small Cap
The main advantage of trading using opposite Oakmark International and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Oakmark International vs. T Rowe Price | Oakmark International vs. Massmutual Premier Global | Oakmark International vs. Blue Current Global | Oakmark International vs. Kinetics Global Fund |
| Small Cap vs. Ultra Short Fixed Income | Small Cap vs. Dodge International Stock | Small Cap vs. Small Cap Equity | Small Cap vs. Dreyfusstandish Global Fixed |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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