Correlation Between Clipper Fund and Sound Shore
Can any of the company-specific risk be diversified away by investing in both Clipper Fund and Sound Shore 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 Sound Shore 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 Sound Shore Fund, you can compare the effects of market volatilities on Clipper Fund and Sound Shore 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 Sound Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clipper Fund and Sound Shore.
Diversification Opportunities for Clipper Fund and Sound Shore
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Clipper and Sound is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Clipper Fund Inc and Sound Shore Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Shore Fund 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 Sound Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Shore Fund has no effect on the direction of Clipper Fund i.e., Clipper Fund and Sound Shore go up and down completely randomly.
Pair Corralation between Clipper Fund and Sound Shore
Assuming the 90 days horizon Clipper Fund Inc is expected to generate 0.83 times more return on investment than Sound Shore. However, Clipper Fund Inc is 1.2 times less risky than Sound Shore. It trades about 0.05 of its potential returns per unit of risk. Sound Shore Fund is currently generating about 0.01 per unit of risk. If you would invest 11,599 in Clipper Fund Inc on October 25, 2024 and sell it today you would earn a total of 2,796 from holding Clipper Fund Inc or generate 24.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clipper Fund Inc vs. Sound Shore Fund
Performance |
| Timeline |
| Clipper Fund |
| Sound Shore Fund |
Clipper Fund and Sound Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clipper Fund and Sound Shore
The main advantage of trading using opposite Clipper Fund and Sound Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clipper Fund position performs unexpectedly, Sound Shore 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 Sound Shore will offset losses from the drop in Sound Shore'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 |
| Sound Shore vs. Transamerica Intermediate Muni | Sound Shore vs. Blrc Sgy Mnp | Sound Shore vs. Blackrock Pa Muni | Sound Shore vs. Lord Abbett Intermediate |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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