Correlation Between Oakmark Bond and Oakmark Equity
Can any of the company-specific risk be diversified away by investing in both Oakmark Bond and Oakmark Equity 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 Bond and Oakmark Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark Bond and Oakmark Equity And, you can compare the effects of market volatilities on Oakmark Bond and Oakmark Equity 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 Bond with a short position of Oakmark Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark Bond and Oakmark Equity.
Diversification Opportunities for Oakmark Bond and Oakmark Equity
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Oakmark and Oakmark is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Bond and Oakmark Equity And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Equity And and Oakmark Bond 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 Bond are associated (or correlated) with Oakmark Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Equity And has no effect on the direction of Oakmark Bond i.e., Oakmark Bond and Oakmark Equity go up and down completely randomly.
Pair Corralation between Oakmark Bond and Oakmark Equity
Assuming the 90 days horizon Oakmark Bond is expected to generate 2.68 times less return on investment than Oakmark Equity. But when comparing it to its historical volatility, Oakmark Bond is 1.7 times less risky than Oakmark Equity. It trades about 0.06 of its potential returns per unit of risk. Oakmark Equity And is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,867 in Oakmark Equity And on August 29, 2024 and sell it today you would earn a total of 877.00 from holding Oakmark Equity And or generate 30.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakmark Bond vs. Oakmark Equity And
Performance |
| Timeline |
| Oakmark Bond |
| Oakmark Equity And |
Oakmark Bond and Oakmark Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark Bond and Oakmark Equity
The main advantage of trading using opposite Oakmark Bond and Oakmark Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Bond position performs unexpectedly, Oakmark Equity 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 Oakmark Equity will offset losses from the drop in Oakmark Equity's long position.| Oakmark Bond vs. Oakmark International Fund | Oakmark Bond vs. Oakmark Fund Advisor | Oakmark Bond vs. Oakmark Select 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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