Correlation Between Akre Focus and The Brown
Can any of the company-specific risk be diversified away by investing in both Akre Focus and The Brown 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 The Brown 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 The Brown 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 The Brown. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akre Focus and The Brown.
Diversification Opportunities for Akre Focus and The Brown
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Akre and The is 0.76. 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 The Brown. 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 The Brown go up and down completely randomly.
Pair Corralation between Akre Focus and The Brown
Assuming the 90 days horizon Akre Focus is expected to generate 1.78 times less return on investment than The Brown. But when comparing it to its historical volatility, Akre Focus Fund is 2.04 times less risky than The Brown. It trades about 0.4 of its potential returns per unit of risk. The Brown Capital is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 7,169 in The Brown Capital on August 30, 2024 and sell it today you would earn a total of 889.00 from holding The Brown Capital or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akre Focus Fund vs. The Brown Capital
Performance |
| Timeline |
| Akre Focus Fund |
| Brown Capital |
Akre Focus and The Brown Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akre Focus and The Brown
The main advantage of trading using opposite Akre Focus and The Brown positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akre Focus position performs unexpectedly, The Brown 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 The Brown will offset losses from the drop in The Brown'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 |
| The Brown vs. T Rowe Price | The Brown vs. T Rowe Price | The Brown vs. Fidelity Small Cap | The Brown vs. Virtus Kar Small Cap |
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 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.
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