Correlation Between Western Asset and Oakmark Global
Can any of the company-specific risk be diversified away by investing in both Western Asset and Oakmark Global 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 Western Asset and Oakmark Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Oakmark Global Fund, you can compare the effects of market volatilities on Western Asset and Oakmark Global 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 Western Asset with a short position of Oakmark Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Oakmark Global.
Diversification Opportunities for Western Asset and Oakmark Global
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Western and Oakmark is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Oakmark Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Global and Western Asset 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 Western Asset Diversified are associated (or correlated) with Oakmark Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Global has no effect on the direction of Western Asset i.e., Western Asset and Oakmark Global go up and down completely randomly.
Pair Corralation between Western Asset and Oakmark Global
Assuming the 90 days horizon Western Asset is expected to generate 2.37 times less return on investment than Oakmark Global. But when comparing it to its historical volatility, Western Asset Diversified is 2.15 times less risky than Oakmark Global. It trades about 0.16 of its potential returns per unit of risk. Oakmark Global Fund is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,352 in Oakmark Global Fund on September 14, 2024 and sell it today you would earn a total of 67.00 from holding Oakmark Global Fund or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Oakmark Global Fund
Performance |
| Timeline |
| Western Asset Diversified |
| Oakmark Global |
Western Asset and Oakmark Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Oakmark Global
The main advantage of trading using opposite Western Asset and Oakmark Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset position performs unexpectedly, Oakmark Global 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 Global will offset losses from the drop in Oakmark Global's long position.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Oakmark Global vs. Boston Partners Longshort | Oakmark Global vs. Kentucky Tax Free Short To Medium | Oakmark Global vs. Quantitative Longshort Equity | Oakmark Global vs. Rbc Short Duration |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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