Correlation Between Fairholme Fund and Oakmark Equity

Can any of the company-specific risk be diversified away by investing in both Fairholme Fund and Oakmark Equity 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 Fairholme Fund and Oakmark Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Fairholme Fund and Oakmark Equity And, you can compare the effects of market volatilities on Fairholme Fund and Oakmark Equity 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 Fairholme Fund with a short position of Oakmark Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fairholme Fund and Oakmark Equity.

Diversification Opportunities for Fairholme Fund and Oakmark Equity

-0.71

Correlation Coefficient

Fairholme Fund  Oakmark Equity

Pay attention - limited upside

The 3 months correlation between Fairholme and Oakmark is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Fairholme Fund and Oakmark Equity And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Equity And and Fairholme Fund 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 The Fairholme Fund are associated (or correlated) with Oakmark Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Equity And has no effect on the direction of Fairholme Fund i.e., Fairholme Fund and Oakmark Equity go up and down completely randomly.

Pair Corralation between Fairholme Fund and Oakmark Equity

Assuming the 90 days horizon The Fairholme Fund is expected to under-perform the Oakmark Equity. In addition to that, Fairholme Fund is 1.85 times more volatile than Oakmark Equity And. It trades about -0.32 of its total potential returns per unit of risk. Oakmark Equity And is currently generating about 0.1 per unit of volatility. If you would invest  3,701  in Oakmark Equity And on September 13, 2024 and sell it today you would earn a total of  29.00  from holding Oakmark Equity And or generate 0.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

The Fairholme Fund  vs.  Oakmark Equity And

Fairholme Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Fairholme Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Oakmark Equity And

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Equity And are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Oakmark Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fairholme Fund and Oakmark Equity

The main advantage of trading using opposite Fairholme Fund and Oakmark Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fairholme Fund position performs unexpectedly, Oakmark Equity 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 Equity will offset losses from the drop in Oakmark Equity's long position.

The idea behind The Fairholme Fund and Oakmark Equity And 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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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.