Correlation Between Clipper Fund and Third Avenue
Can any of the company-specific risk be diversified away by investing in both Clipper Fund and Third Avenue 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 Third Avenue 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 Third Avenue Value, you can compare the effects of market volatilities on Clipper Fund and Third Avenue 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 Third Avenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clipper Fund and Third Avenue.
Diversification Opportunities for Clipper Fund and Third Avenue
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clipper and Third is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Clipper Fund Inc and Third Avenue Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Value 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 Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Value has no effect on the direction of Clipper Fund i.e., Clipper Fund and Third Avenue go up and down completely randomly.
Pair Corralation between Clipper Fund and Third Avenue
Assuming the 90 days horizon Clipper Fund Inc is expected to generate 0.99 times more return on investment than Third Avenue. However, Clipper Fund Inc is 1.01 times less risky than Third Avenue. It trades about 0.06 of its potential returns per unit of risk. Third Avenue Value is currently generating about -0.06 per unit of risk. If you would invest 14,595 in Clipper Fund Inc on September 1, 2024 and sell it today you would earn a total of 993.00 from holding Clipper Fund Inc or generate 6.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clipper Fund Inc vs. Third Avenue Value
Performance |
| Timeline |
| Clipper Fund |
| Third Avenue Value |
Clipper Fund and Third Avenue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clipper Fund and Third Avenue
The main advantage of trading using opposite Clipper Fund and Third Avenue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clipper Fund position performs unexpectedly, Third Avenue 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 Third Avenue will offset losses from the drop in Third Avenue'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 |
| Third Avenue vs. Third Avenue Real | Third Avenue vs. Third Avenue Small Cap | Third Avenue vs. Third Avenue Real | Third Avenue vs. Third Avenue Small |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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