Correlation Between Oakmark International and International Business

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Can any of the company-specific risk be diversified away by investing in both Oakmark International and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oakmark International Small and International Business Machines, you can compare the effects of market volatilities on Oakmark International and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark International and International Business.

Diversification Opportunities for Oakmark International and International Business

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Oakmark and International is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International Small and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 Small are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Oakmark International i.e., Oakmark International and International Business go up and down completely randomly.

Pair Corralation between Oakmark International and International Business

Assuming the 90 days horizon Oakmark International Small is expected to under-perform the International Business. In addition to that, Oakmark International is 1.4 times more volatile than International Business Machines. It trades about -0.08 of its total potential returns per unit of risk. International Business Machines is currently generating about -0.02 per unit of volatility. If you would invest  12,672  in International Business Machines on July 7, 2022 and sell it today you would lose (98.00)  from holding International Business Machines or give up 0.77% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Oakmark International Small  vs.  International Business Machine

 Performance (%) 
       Timeline  
Oakmark International 
Oakmark Performance
0 of 100
Over the last 90 days Oakmark International Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unsteady performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Oakmark Price Channel

International Business 
International Performance
0 of 100
Over the last 90 days International Business Machines has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest sluggish performance, the Stock's fundamental drivers remain steady and the new chaos on Wall Street may also be a sign of medium-term gains for the company stakeholders.

International Price Channel

Oakmark International and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oakmark International and International Business

The main advantage of trading using opposite Oakmark International and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark International position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
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The idea behind Oakmark International Small and International Business Machines 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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