Correlation Between Akre Focus and Edgewood Growth
Can any of the company-specific risk be diversified away by investing in both Akre Focus and Edgewood Growth 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 Edgewood Growth 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 Edgewood Growth Fund, you can compare the effects of market volatilities on Akre Focus and Edgewood Growth 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 Edgewood Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akre Focus and Edgewood Growth.
Diversification Opportunities for Akre Focus and Edgewood Growth
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Akre and Edgewood is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Akre Focus Fund and Edgewood Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewood Growth 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 Edgewood Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewood Growth has no effect on the direction of Akre Focus i.e., Akre Focus and Edgewood Growth go up and down completely randomly.
Pair Corralation between Akre Focus and Edgewood Growth
Assuming the 90 days horizon Akre Focus Fund is expected to generate 0.46 times more return on investment than Edgewood Growth. However, Akre Focus Fund is 2.17 times less risky than Edgewood Growth. It trades about -0.03 of its potential returns per unit of risk. Edgewood Growth Fund is currently generating about -0.06 per unit of risk. If you would invest 6,825 in Akre Focus Fund on October 24, 2024 and sell it today you would lose (178.00) from holding Akre Focus Fund or give up 2.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Akre Focus Fund vs. Edgewood Growth Fund
Performance |
| Timeline |
| Akre Focus Fund |
| Edgewood Growth |
Akre Focus and Edgewood Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akre Focus and Edgewood Growth
The main advantage of trading using opposite Akre Focus and Edgewood Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akre Focus position performs unexpectedly, Edgewood Growth 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 Edgewood Growth will offset losses from the drop in Edgewood Growth'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 |
| Edgewood Growth vs. Edgewood Growth Fund | Edgewood Growth vs. Polen Growth Fund | Edgewood Growth vs. Doubleline Shiller Enhanced | Edgewood Growth vs. Parnassus Endeavor Fund |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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