Correlation Between Akre Focus and Poplar Forest
Can any of the company-specific risk be diversified away by investing in both Akre Focus and Poplar Forest 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 Poplar Forest 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 Poplar Forest Partners, you can compare the effects of market volatilities on Akre Focus and Poplar Forest 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 Poplar Forest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akre Focus and Poplar Forest.
Diversification Opportunities for Akre Focus and Poplar Forest
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Akre and Poplar is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Akre Focus Fund and Poplar Forest Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poplar Forest Partners 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 Poplar Forest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poplar Forest Partners has no effect on the direction of Akre Focus i.e., Akre Focus and Poplar Forest go up and down completely randomly.
Pair Corralation between Akre Focus and Poplar Forest
Assuming the 90 days horizon Akre Focus is expected to generate 5.41 times less return on investment than Poplar Forest. In addition to that, Akre Focus is 1.18 times more volatile than Poplar Forest Partners. It trades about 0.02 of its total potential returns per unit of risk. Poplar Forest Partners is currently generating about 0.11 per unit of volatility. If you would invest 5,052 in Poplar Forest Partners on November 28, 2024 and sell it today you would earn a total of 80.00 from holding Poplar Forest Partners or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Akre Focus Fund vs. Poplar Forest Partners
Performance |
| Timeline |
| Akre Focus Fund |
| Poplar Forest Partners |
Akre Focus and Poplar Forest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Akre Focus and Poplar Forest
The main advantage of trading using opposite Akre Focus and Poplar Forest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akre Focus position performs unexpectedly, Poplar Forest 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 Poplar Forest will offset losses from the drop in Poplar Forest's long position.| Akre Focus vs. Akre Focus Fund | Akre Focus vs. Akre Focus Fund | Akre Focus vs. T Rowe Price | Akre Focus vs. Aqr Diversified Arbitrage |
| Poplar Forest vs. Poplar Forest Partners | Poplar Forest vs. Poplar Forest Nerstone | Poplar Forest vs. Columbia Select Large Cap | Poplar Forest vs. Prudential Qma Mid 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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