Correlation Between Akre Focus and Brown Capital
Can any of the company-specific risk be diversified away by investing in both Akre Focus and Brown Capital 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 Akre Focus and Brown Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akre Focus Fund and The Brown Capital, you can compare the effects of market volatilities on Akre Focus and Brown Capital 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 Akre Focus with a short position of Brown Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akre Focus and Brown Capital.
Diversification Opportunities for Akre Focus and Brown Capital
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Akre and Brown is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Akre Focus Fund and The Brown Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Capital and Akre Focus 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 Akre Focus Fund are associated (or correlated) with Brown Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Capital has no effect on the direction of Akre Focus i.e., Akre Focus and Brown Capital go up and down completely randomly.
Pair Corralation between Akre Focus and Brown Capital
Assuming the 90 days horizon Akre Focus Fund is expected to generate 0.16 times more return on investment than Brown Capital. However, Akre Focus Fund is 6.25 times less risky than Brown Capital. It trades about -0.11 of its potential returns per unit of risk. The Brown Capital is currently generating about -0.19 per unit of risk. If you would invest 6,938 in Akre Focus Fund on September 13, 2024 and sell it today you would lose (213.00) from holding Akre Focus Fund or give up 3.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Akre Focus Fund vs. The Brown Capital
Performance |
| Timeline |
| Akre Focus Fund |
| Brown Capital |
Akre Focus and Brown Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akre Focus and Brown Capital
The main advantage of trading using opposite Akre Focus and Brown Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akre Focus position performs unexpectedly, Brown Capital 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 Brown Capital will offset losses from the drop in Brown Capital's long position.| Akre Focus vs. Osterweis Strategic Income | Akre Focus vs. Doubleline Low Duration | Akre Focus vs. Doubleline Total Return | Akre Focus vs. Primecap Odyssey Growth |
| Brown Capital vs. American Beacon Bridgeway | Brown Capital vs. Akre Focus Fund | Brown Capital vs. Large Cap Fund | Brown Capital vs. Amg Managers Skyline |
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 the Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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