Correlation Between Longleaf Partners and Sequoia Fund
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners and Sequoia Fund 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 Longleaf Partners and Sequoia Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longleaf Partners International and Sequoia Fund Inc, you can compare the effects of market volatilities on Longleaf Partners and Sequoia Fund 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 Longleaf Partners with a short position of Sequoia Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Sequoia Fund.
Diversification Opportunities for Longleaf Partners and Sequoia Fund
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Longleaf and Sequoia is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Internationa and Sequoia Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia Fund and Longleaf Partners 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 Longleaf Partners International are associated (or correlated) with Sequoia Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Fund has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Sequoia Fund go up and down completely randomly.
Pair Corralation between Longleaf Partners and Sequoia Fund
Assuming the 90 days horizon Longleaf Partners International is expected to under-perform the Sequoia Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Longleaf Partners International is 1.37 times less risky than Sequoia Fund. The mutual fund trades about -0.1 of its potential returns per unit of risk. The Sequoia Fund Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 19,098 in Sequoia Fund Inc on September 3, 2024 and sell it today you would lose (101.00) from holding Sequoia Fund Inc or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Internationa vs. Sequoia Fund Inc
Performance |
| Timeline |
| Longleaf Partners |
| Sequoia Fund |
Longleaf Partners and Sequoia Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Sequoia Fund
The main advantage of trading using opposite Longleaf Partners and Sequoia Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners position performs unexpectedly, Sequoia Fund 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 Sequoia Fund will offset losses from the drop in Sequoia Fund's long position.| Longleaf Partners vs. Tiaa Cref Inflation Linked Bond | Longleaf Partners vs. Asg Managed Futures | Longleaf Partners vs. Cref Inflation Linked Bond | Longleaf Partners vs. Ab Bond Inflation |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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