Correlation Between Clipper Fund and Parnassus Core
Can any of the company-specific risk be diversified away by investing in both Clipper Fund and Parnassus Core 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 Clipper Fund and Parnassus Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clipper Fund Inc and Parnassus E Equity, you can compare the effects of market volatilities on Clipper Fund and Parnassus Core 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 Clipper Fund with a short position of Parnassus Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clipper Fund and Parnassus Core.
Diversification Opportunities for Clipper Fund and Parnassus Core
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Clipper and Parnassus is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Clipper Fund Inc and Parnassus E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Parnassus E Equity and Clipper Fund 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 Clipper Fund Inc are associated (or correlated) with Parnassus Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Parnassus E Equity has no effect on the direction of Clipper Fund i.e., Clipper Fund and Parnassus Core go up and down completely randomly.
Pair Corralation between Clipper Fund and Parnassus Core
Assuming the 90 days horizon Clipper Fund is expected to generate 1.07 times less return on investment than Parnassus Core. In addition to that, Clipper Fund is 1.21 times more volatile than Parnassus E Equity. It trades about 0.09 of its total potential returns per unit of risk. Parnassus E Equity is currently generating about 0.11 per unit of volatility. If you would invest 5,497 in Parnassus E Equity on August 25, 2024 and sell it today you would earn a total of 1,156 from holding Parnassus E Equity or generate 21.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clipper Fund Inc vs. Parnassus E Equity
Performance |
| Timeline |
| Clipper Fund |
| Parnassus E Equity |
Clipper Fund and Parnassus Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clipper Fund and Parnassus Core
The main advantage of trading using opposite Clipper Fund and Parnassus Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clipper Fund position performs unexpectedly, Parnassus Core 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 Parnassus Core will offset losses from the drop in Parnassus Core's long position.| Clipper Fund vs. Value Fund Value | Clipper Fund vs. Meridian Trarian Fund | Clipper Fund vs. Longleaf Partners Fund | Clipper Fund vs. Mairs Power Growth |
| Parnassus Core vs. Parnassus Endeavor Fund | Parnassus Core vs. Parnassus Mid Cap | Parnassus Core vs. The Jensen Portfolio | Parnassus Core vs. Metropolitan West Total |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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