Correlation Between Rationalpier and Oakmark Fund

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

By analyzing existing cross correlation between Rationalpier 88 Convertible and Oakmark Fund R6, you can compare the effects of market volatilities on Rationalpier and Oakmark Fund 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 Rationalpier with a short position of Oakmark Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rationalpier and Oakmark Fund.

Diversification Opportunities for Rationalpier and Oakmark Fund

0.95

Correlation Coefficient

Rationalpier  Oakmark Fund

Almost no diversification

The 3 months correlation between Rationalpier and Oakmark is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Rationalpier 88 Convertible and Oakmark Fund R6 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Fund R6 and Rationalpier 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 Rationalpier 88 Convertible are associated (or correlated) with Oakmark Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Fund R6 has no effect on the direction of Rationalpier i.e., Rationalpier and Oakmark Fund go up and down completely randomly.

Pair Corralation between Rationalpier and Oakmark Fund

Assuming the 90 days horizon Rationalpier is expected to generate 1.5 times less return on investment than Oakmark Fund. But when comparing it to its historical volatility, Rationalpier 88 Convertible is 2.11 times less risky than Oakmark Fund. It trades about 0.37 of its potential returns per unit of risk. Oakmark Fund R6 is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  15,308  in Oakmark Fund R6 on September 5, 2024 and sell it today you would earn a total of  911.00  from holding Oakmark Fund R6 or generate 5.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Rationalpier 88 Convertible  vs.  Oakmark Fund R6

Rationalpier 88 Conv

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rationalpier 88 Convertible are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Rationalpier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Oakmark Fund R6

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Fund R6 are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Oakmark Fund may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rationalpier and Oakmark Fund

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

The idea behind Rationalpier 88 Convertible and Oakmark Fund R6 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.