Correlation Between Tweedy Browne and Oakmark International

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

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

Diversification Opportunities for Tweedy Browne and Oakmark International

0.9

Correlation Coefficient

Tweedy Browne  Oakmark International

Almost no diversification

The 3 months correlation between Tweedy and Oakmark is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Tweedy Browne Global and Oakmark International Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark International and Tweedy Browne 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 Tweedy Browne Global are associated (or correlated) with Oakmark International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark International has no effect on the direction of Tweedy Browne i.e., Tweedy Browne and Oakmark International go up and down completely randomly.

Pair Corralation between Tweedy Browne and Oakmark International

Assuming the 90 days horizon Tweedy Browne Global is expected to under-perform the Oakmark International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tweedy Browne Global is 1.95 times less risky than Oakmark International. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Oakmark International Fund is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,631  in Oakmark International Fund on September 12, 2024 and sell it today you would earn a total of  26.00  from holding Oakmark International Fund or generate 0.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Tweedy Browne Global  vs.  Oakmark International Fund

Tweedy Browne Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tweedy Browne Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Tweedy Browne is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oakmark International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark International Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Oakmark International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tweedy Browne and Oakmark International

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

The idea behind Tweedy Browne Global and Oakmark International Fund 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.