Correlation Between Heartland Value and Teton Westwood
Can any of the company-specific risk be diversified away by investing in both Heartland Value and Teton Westwood 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 Teton Westwood 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 Teton Westwood Mighty, you can compare the effects of market volatilities on Heartland Value and Teton Westwood 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 Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Teton Westwood.
Diversification Opportunities for Heartland Value and Teton Westwood
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Heartland and Teton is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Teton Westwood Mighty in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Mighty 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 Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Mighty has no effect on the direction of Heartland Value i.e., Heartland Value and Teton Westwood go up and down completely randomly.
Pair Corralation between Heartland Value and Teton Westwood
Assuming the 90 days horizon Heartland Value Plus is expected to generate 1.03 times more return on investment than Teton Westwood. However, Heartland Value is 1.03 times more volatile than Teton Westwood Mighty. It trades about 0.27 of its potential returns per unit of risk. Teton Westwood Mighty is currently generating about 0.23 per unit of risk. If you would invest 3,710 in Heartland Value Plus on September 5, 2024 and sell it today you would earn a total of 340.00 from holding Heartland Value Plus or generate 9.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Heartland Value Plus vs. Teton Westwood Mighty
Performance |
| Timeline |
| Heartland Value Plus |
| Teton Westwood Mighty |
Heartland Value and Teton Westwood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heartland Value and Teton Westwood
The main advantage of trading using opposite Heartland Value and Teton Westwood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Value position performs unexpectedly, Teton Westwood 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 Teton Westwood will offset losses from the drop in Teton Westwood's long position.| Heartland Value vs. Heartland Value Fund | Heartland Value vs. Large Cap Fund | Heartland Value vs. Amg Yacktman Fund | Heartland Value vs. Wasatch Large Cap |
| Teton Westwood vs. The Gabelli Small | Teton Westwood vs. Teton Westwood Equity | Teton Westwood vs. The Gabelli Equity | Teton Westwood vs. Heartland Value Plus |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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