Correlation Between Heartland Value and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Heartland Value and Blue Chip 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 Heartland Value and Blue Chip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Heartland Value Plus and Blue Chip Growth, you can compare the effects of market volatilities on Heartland Value and Blue Chip 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 Heartland Value with a short position of Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Blue Chip.
Diversification Opportunities for Heartland Value and Blue Chip
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Heartland and Blue is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Blue Chip Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Growth and Heartland Value 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 Heartland Value Plus are associated (or correlated) with Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Growth has no effect on the direction of Heartland Value i.e., Heartland Value and Blue Chip go up and down completely randomly.
Pair Corralation between Heartland Value and Blue Chip
Assuming the 90 days horizon Heartland Value Plus is expected to under-perform the Blue Chip. But the mutual fund apears to be less risky and, when comparing its historical volatility, Heartland Value Plus is 1.12 times less risky than Blue Chip. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Blue Chip Growth is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,990 in Blue Chip Growth on September 13, 2024 and sell it today you would earn a total of 64.00 from holding Blue Chip Growth or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Heartland Value Plus vs. Blue Chip Growth
Performance |
| Timeline |
| Heartland Value Plus |
| Blue Chip Growth |
Heartland Value and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Value and Blue Chip
The main advantage of trading using opposite Heartland Value and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value position performs unexpectedly, Blue Chip 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 Blue Chip will offset losses from the drop in Blue Chip's long position.| Heartland Value vs. Heartland Value Fund | Heartland Value vs. Large Cap Fund | Heartland Value vs. Permanent Portfolio Class | Heartland Value vs. Aquagold International |
| Blue Chip vs. Mid Cap Index | Blue Chip vs. Mid Cap Strategic | Blue Chip vs. Valic Company I | Blue Chip vs. Small Cap Special |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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