Correlation Between Oakmark Fund and American Mutual
Can any of the company-specific risk be diversified away by investing in both Oakmark Fund and American Mutual 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 American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark Fund R6 and American Mutual Fund, you can compare the effects of market volatilities on Oakmark Fund and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark Fund and American Mutual.
Diversification Opportunities for Oakmark Fund and American Mutual
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oakmark and American is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Fund R6 and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 R6 are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Oakmark Fund i.e., Oakmark Fund and American Mutual go up and down completely randomly.
Pair Corralation between Oakmark Fund and American Mutual
Assuming the 90 days horizon Oakmark Fund R6 is expected to generate 1.49 times more return on investment than American Mutual. However, Oakmark Fund is 1.49 times more volatile than American Mutual Fund. It trades about 0.14 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.17 per unit of risk. If you would invest 14,019 in Oakmark Fund R6 on September 1, 2024 and sell it today you would earn a total of 2,291 from holding Oakmark Fund R6 or generate 16.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Oakmark Fund R6 vs. American Mutual Fund
Performance |
| Timeline |
| Oakmark Fund R6 |
| American Mutual |
Oakmark Fund and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark Fund and American Mutual
The main advantage of trading using opposite Oakmark Fund and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Fund position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Oakmark Fund vs. Oakmark International Fund | Oakmark Fund vs. Oakmark Fund Advisor | Oakmark Fund vs. Oakmark Select Fund | Oakmark Fund vs. Oakmark Global Select |
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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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