Correlation Between Large Cap and Akre Focus
Can any of the company-specific risk be diversified away by investing in both Large Cap and Akre Focus 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 Large Cap and Akre Focus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Fund and Akre Focus Fund, you can compare the effects of market volatilities on Large Cap and Akre Focus 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 Large Cap with a short position of Akre Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large Cap and Akre Focus.
Diversification Opportunities for Large Cap and Akre Focus
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Large and Akre is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Fund and Akre Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akre Focus Fund and Large Cap 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 Large Cap Fund are associated (or correlated) with Akre Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akre Focus Fund has no effect on the direction of Large Cap i.e., Large Cap and Akre Focus go up and down completely randomly.
Pair Corralation between Large Cap and Akre Focus
Assuming the 90 days horizon Large Cap is expected to generate 4.22 times less return on investment than Akre Focus. In addition to that, Large Cap is 1.41 times more volatile than Akre Focus Fund. It trades about 0.02 of its total potential returns per unit of risk. Akre Focus Fund is currently generating about 0.1 per unit of volatility. If you would invest 4,703 in Akre Focus Fund on August 30, 2024 and sell it today you would earn a total of 2,480 from holding Akre Focus Fund or generate 52.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Fund vs. Akre Focus Fund
Performance |
| Timeline |
| Large Cap Fund |
| Akre Focus Fund |
Large Cap and Akre Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large Cap and Akre Focus
The main advantage of trading using opposite Large Cap and Akre Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large Cap position performs unexpectedly, Akre Focus 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 Akre Focus will offset losses from the drop in Akre Focus' long position.| Large Cap vs. Vanguard Total Stock | Large Cap vs. Vanguard 500 Index | Large Cap vs. Vanguard Total Stock | Large Cap vs. Vanguard Total Stock |
| Akre Focus vs. Osterweis Strategic Income | Akre Focus vs. Doubleline Low Duration | Akre Focus vs. Doubleline Total Return | Akre Focus vs. Primecap Odyssey Growth |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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