Correlation Between Energy Services and Oakmark International
Can any of the company-specific risk be diversified away by investing in both Energy Services and Oakmark International 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 Energy Services and Oakmark International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Services Fund and Oakmark International Fund, you can compare the effects of market volatilities on Energy Services and Oakmark International 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 Energy Services with a short position of Oakmark International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Services and Oakmark International.
Diversification Opportunities for Energy Services and Oakmark International
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energy and Oakmark is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Energy Services Fund and Oakmark International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and Energy Services 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 Energy Services Fund are associated (or correlated) with Oakmark International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark International has no effect on the direction of Energy Services i.e., Energy Services and Oakmark International go up and down completely randomly.
Pair Corralation between Energy Services and Oakmark International
Assuming the 90 days horizon Energy Services Fund is expected to under-perform the Oakmark International. In addition to that, Energy Services is 1.82 times more volatile than Oakmark International Fund. It trades about -0.01 of its total potential returns per unit of risk. Oakmark International Fund is currently generating about 0.0 per unit of volatility. If you would invest 2,749 in Oakmark International Fund on September 12, 2024 and sell it today you would lose (83.00) from holding Oakmark International Fund or give up 3.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Services Fund vs. Oakmark International Fund
Performance |
| Timeline |
| Energy Services |
| Oakmark International |
Energy Services and Oakmark International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Services and Oakmark International
The main advantage of trading using opposite Energy Services and Oakmark International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Services position performs unexpectedly, Oakmark International 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 International will offset losses from the drop in Oakmark International's long position.| Energy Services vs. Energy Fund Investor | Energy Services vs. Basic Materials Fund | Energy Services vs. Electronics Fund Investor | Energy Services vs. Health Care Fund |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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