Correlation Between Oakmark International and Vanguard Developed
Can any of the company-specific risk be diversified away by investing in both Oakmark International and Vanguard Developed 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 International and Vanguard Developed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark International Fund and Vanguard Developed Markets, you can compare the effects of market volatilities on Oakmark International and Vanguard Developed 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 International with a short position of Vanguard Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and Vanguard Developed.
Diversification Opportunities for Oakmark International and Vanguard Developed
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Oakmark and Vanguard is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Fund and Vanguard Developed Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Developed and Oakmark 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 Oakmark International Fund are associated (or correlated) with Vanguard Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Developed has no effect on the direction of Oakmark International i.e., Oakmark International and Vanguard Developed go up and down completely randomly.
Pair Corralation between Oakmark International and Vanguard Developed
Assuming the 90 days horizon Oakmark International Fund is expected to generate 1.02 times more return on investment than Vanguard Developed. However, Oakmark International is 1.02 times more volatile than Vanguard Developed Markets. It trades about -0.1 of its potential returns per unit of risk. Vanguard Developed Markets is currently generating about -0.13 per unit of risk. If you would invest 2,669 in Oakmark International Fund on January 30, 2024 and sell it today you would lose (44.00) from holding Oakmark International Fund or give up 1.65% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Oakmark International Fund vs. Vanguard Developed Markets
Performance |
Timeline |
Oakmark International |
Vanguard Developed |
Oakmark International and Vanguard Developed Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Oakmark International and Vanguard Developed
The main advantage of trading using opposite Oakmark International and Vanguard Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, Vanguard Developed 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 Vanguard Developed will offset losses from the drop in Vanguard Developed's long position.Oakmark International vs. Dodge Cox International | Oakmark International vs. Dodge International Stock | Oakmark International vs. Oakmark International Fund | Oakmark International vs. T Rowe Price |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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