Correlation Between Oakmark Global and American Funds
Can any of the company-specific risk be diversified away by investing in both Oakmark Global and American Funds 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 Global and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark Global Select and American Funds Global, you can compare the effects of market volatilities on Oakmark Global and American Funds 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 Global with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark Global and American Funds.
Diversification Opportunities for Oakmark Global and American Funds
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Oakmark and American is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Global Select and American Funds Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global and Oakmark Global 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 Global Select are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of Oakmark Global i.e., Oakmark Global and American Funds go up and down completely randomly.
Pair Corralation between Oakmark Global and American Funds
Assuming the 90 days horizon Oakmark Global Select is expected to generate 0.88 times more return on investment than American Funds. However, Oakmark Global Select is 1.13 times less risky than American Funds. It trades about 0.01 of its potential returns per unit of risk. American Funds Global is currently generating about 0.01 per unit of risk. If you would invest 2,106 in Oakmark Global Select on January 20, 2024 and sell it today you would earn a total of 6.00 from holding Oakmark Global Select or generate 0.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oakmark Global Select vs. American Funds Global
Performance |
| Timeline |
| Oakmark Global Select |
| American Funds Global |
Oakmark Global and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oakmark Global and American Funds
The main advantage of trading using opposite Oakmark Global and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark Global position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Oakmark Global vs. Oakmark International Fund | Oakmark Global vs. Oakmark Fund Advisor | Oakmark Global vs. Oakmark Select Fund | Oakmark Global vs. Oakmark International Small |
| American Funds vs. Columbia Capital Allocation | American Funds vs. State Street Institutional | American Funds vs. Blackrock Basic Value | American Funds vs. Europacific Growth 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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