Correlation Between OAKMARK INTERNATIONAL and IShares Commodity

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Can any of the company-specific risk be diversified away by investing in both OAKMARK INTERNATIONAL and IShares Commodity 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 IShares Commodity 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 IShares Commodity Curve, you can compare the effects of market volatilities on OAKMARK INTERNATIONAL and IShares Commodity 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 IShares Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of OAKMARK INTERNATIONAL and IShares Commodity.

Diversification Opportunities for OAKMARK INTERNATIONAL and IShares Commodity

0.61
  Correlation Coefficient

Poor diversification

The 3 months correlation between OAKMARK and IShares is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding OAKMARK INTERNATIONAL FUND and IShares Commodity Curve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IShares Commodity Curve 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 IShares Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IShares Commodity Curve has no effect on the direction of OAKMARK INTERNATIONAL i.e., OAKMARK INTERNATIONAL and IShares Commodity go up and down completely randomly.

Pair Corralation between OAKMARK INTERNATIONAL and IShares Commodity

Assuming the 90 days horizon OAKMARK INTERNATIONAL is expected to generate 21.61 times less return on investment than IShares Commodity. But when comparing it to its historical volatility, OAKMARK INTERNATIONAL FUND is 1.03 times less risky than IShares Commodity. It trades about 0.0 of its potential returns per unit of risk. IShares Commodity Curve is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,636  in IShares Commodity Curve on September 5, 2022 and sell it today you would earn a total of  1,045  from holding IShares Commodity Curve or generate 63.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

OAKMARK INTERNATIONAL FUND  vs.  IShares Commodity Curve

 Performance (%) 
       Timeline  
OAKMARK INTERNATIONAL 
OAKMARK Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in OAKMARK INTERNATIONAL FUND are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady forward indicators, OAKMARK INTERNATIONAL showed solid returns over the last few months and may actually be approaching a breakup point.

OAKMARK Price Channel

IShares Commodity Curve 
IShares Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in IShares Commodity Curve are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, IShares Commodity is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

IShares Price Channel

OAKMARK INTERNATIONAL and IShares Commodity Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OAKMARK INTERNATIONAL and IShares Commodity

The main advantage of trading using opposite OAKMARK INTERNATIONAL and IShares Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OAKMARK INTERNATIONAL position performs unexpectedly, IShares Commodity 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 IShares Commodity will offset losses from the drop in IShares Commodity's long position.
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The idea behind OAKMARK INTERNATIONAL FUND and IShares Commodity Curve 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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