Correlation Between Vanguard International and Oakmark International
Can any of the company-specific risk be diversified away by investing in both Vanguard International 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 Vanguard International and Oakmark International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard International Value and Oakmark International Fund, you can compare the effects of market volatilities on Vanguard International 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 Vanguard International with a short position of Oakmark International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard International and Oakmark International.
Diversification Opportunities for Vanguard International and Oakmark International
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Oakmark is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International Value and Oakmark International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and Vanguard 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 Vanguard International Value 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 Vanguard International i.e., Vanguard International and Oakmark International go up and down completely randomly.
Pair Corralation between Vanguard International and Oakmark International
Assuming the 90 days horizon Vanguard International Value is expected to generate 0.87 times more return on investment than Oakmark International. However, Vanguard International Value is 1.15 times less risky than Oakmark International. It trades about 0.04 of its potential returns per unit of risk. Oakmark International Fund is currently generating about 0.01 per unit of risk. If you would invest 3,860 in Vanguard International Value on September 3, 2024 and sell it today you would earn a total of 311.00 from holding Vanguard International Value or generate 8.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard International Value vs. Oakmark International Fund
Performance |
| Timeline |
| Vanguard International |
| Oakmark International |
Vanguard International and Oakmark International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard International and Oakmark International
The main advantage of trading using opposite Vanguard International and Oakmark International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International 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.The idea behind Vanguard International Value and Oakmark International Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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