Correlation Between Pace High and Oakmark Select
Can any of the company-specific risk be diversified away by investing in both Pace High and Oakmark Select 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 Pace High and Oakmark Select into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pace High Yield and Oakmark Select, you can compare the effects of market volatilities on Pace High and Oakmark Select 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 Pace High with a short position of Oakmark Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pace High and Oakmark Select.
Diversification Opportunities for Pace High and Oakmark Select
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pace and Oakmark is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pace High Yield and Oakmark Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Select and Pace High 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 Pace High Yield are associated (or correlated) with Oakmark Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Select has no effect on the direction of Pace High i.e., Pace High and Oakmark Select go up and down completely randomly.
Pair Corralation between Pace High and Oakmark Select
Assuming the 90 days horizon Pace High is expected to generate 2.86 times less return on investment than Oakmark Select. But when comparing it to its historical volatility, Pace High Yield is 4.53 times less risky than Oakmark Select. It trades about 0.16 of its potential returns per unit of risk. Oakmark Select is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,065 in Oakmark Select on September 4, 2024 and sell it today you would earn a total of 3,404 from holding Oakmark Select or generate 67.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pace High Yield vs. Oakmark Select
Performance |
| Timeline |
| Pace High Yield |
| Oakmark Select |
Pace High and Oakmark Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pace High and Oakmark Select
The main advantage of trading using opposite Pace High and Oakmark Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pace High position performs unexpectedly, Oakmark Select 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 Select will offset losses from the drop in Oakmark Select's long position.| Pace High vs. Pace International Equity | Pace High vs. Pace International Equity | Pace High vs. Ubs Allocation Fund | Pace High vs. Ubs Allocation Fund |
| Oakmark Select vs. Touchstone Small Cap | Oakmark Select vs. Chartwell Small Cap | Oakmark Select vs. The Hartford Small | Oakmark Select vs. Small Cap Value |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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