Correlation Between Conestoga Small and Buffalo Discovery
Can any of the company-specific risk be diversified away by investing in both Conestoga Small and Buffalo Discovery 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 Conestoga Small and Buffalo Discovery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Conestoga Small Cap and Buffalo Discovery Fund, you can compare the effects of market volatilities on Conestoga Small and Buffalo Discovery 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 Conestoga Small with a short position of Buffalo Discovery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Conestoga Small and Buffalo Discovery.
Diversification Opportunities for Conestoga Small and Buffalo Discovery
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Conestoga and Buffalo is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Conestoga Small Cap and Buffalo Discovery Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Discovery and Conestoga Small 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 Conestoga Small Cap are associated (or correlated) with Buffalo Discovery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Discovery has no effect on the direction of Conestoga Small i.e., Conestoga Small and Buffalo Discovery go up and down completely randomly.
Pair Corralation between Conestoga Small and Buffalo Discovery
Assuming the 90 days horizon Conestoga Small Cap is expected to generate 1.17 times more return on investment than Buffalo Discovery. However, Conestoga Small is 1.17 times more volatile than Buffalo Discovery Fund. It trades about 0.06 of its potential returns per unit of risk. Buffalo Discovery Fund is currently generating about 0.06 per unit of risk. If you would invest 6,118 in Conestoga Small Cap on August 29, 2024 and sell it today you would earn a total of 2,264 from holding Conestoga Small Cap or generate 37.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Conestoga Small Cap vs. Buffalo Discovery Fund
Performance |
| Timeline |
| Conestoga Small Cap |
| Buffalo Discovery |
Conestoga Small and Buffalo Discovery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Conestoga Small and Buffalo Discovery
The main advantage of trading using opposite Conestoga Small and Buffalo Discovery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Conestoga Small position performs unexpectedly, Buffalo Discovery 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 Buffalo Discovery will offset losses from the drop in Buffalo Discovery's long position.| Conestoga Small vs. T Rowe Price | Conestoga Small vs. T Rowe Price | Conestoga Small vs. Fidelity Small Cap | Conestoga Small vs. Virtus Kar Small Cap |
| Buffalo Discovery vs. Buffalo Mid Cap | Buffalo Discovery vs. Large Cap Fund | Buffalo Discovery vs. Buffalo Small Cap | Buffalo Discovery vs. Schwab Health Care |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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