Correlation Between Longleaf Partners and Abbey Capital
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners and Abbey Capital 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 Abbey Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longleaf Partners Fund and Abbey Capital Futures, you can compare the effects of market volatilities on Longleaf Partners and Abbey Capital 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 Abbey Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Abbey Capital.
Diversification Opportunities for Longleaf Partners and Abbey Capital
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Longleaf and Abbey is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Abbey Capital Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abbey Capital Futures 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 Fund are associated (or correlated) with Abbey Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abbey Capital Futures has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Abbey Capital go up and down completely randomly.
Pair Corralation between Longleaf Partners and Abbey Capital
Assuming the 90 days horizon Longleaf Partners Fund is expected to generate 1.4 times more return on investment than Abbey Capital. However, Longleaf Partners is 1.4 times more volatile than Abbey Capital Futures. It trades about 0.08 of its potential returns per unit of risk. Abbey Capital Futures is currently generating about 0.01 per unit of risk. If you would invest 2,549 in Longleaf Partners Fund on August 28, 2024 and sell it today you would earn a total of 31.00 from holding Longleaf Partners Fund or generate 1.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Fund vs. Abbey Capital Futures
Performance |
| Timeline |
| Longleaf Partners |
| Abbey Capital Futures |
Longleaf Partners and Abbey Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Abbey Capital
The main advantage of trading using opposite Longleaf Partners and Abbey Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners position performs unexpectedly, Abbey Capital 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 Abbey Capital will offset losses from the drop in Abbey Capital's long position.| Longleaf Partners vs. Longleaf Partners Global | Longleaf Partners vs. Longleaf Partners Small Cap | Longleaf Partners vs. Northern Institutional Funds | Longleaf Partners vs. Dreyfus Yield Enhancement |
| Abbey Capital vs. Abbey Capital Multi | Abbey Capital vs. Vanguard 500 Index | Abbey Capital vs. Vanguard Target Retirement | Abbey Capital vs. Fidelity Balanced Fund |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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