Correlation Between Longleaf Partners and Arbitrage Credit
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners and Arbitrage Credit 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 Arbitrage Credit 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 The Arbitrage Credit, you can compare the effects of market volatilities on Longleaf Partners and Arbitrage Credit 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 Arbitrage Credit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Arbitrage Credit.
Diversification Opportunities for Longleaf Partners and Arbitrage Credit
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Longleaf and Arbitrage is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and The Arbitrage Credit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbitrage Credit 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 Arbitrage Credit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbitrage Credit has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Arbitrage Credit go up and down completely randomly.
Pair Corralation between Longleaf Partners and Arbitrage Credit
Assuming the 90 days horizon Longleaf Partners Fund is expected to generate 7.16 times more return on investment than Arbitrage Credit. However, Longleaf Partners is 7.16 times more volatile than The Arbitrage Credit. It trades about 0.09 of its potential returns per unit of risk. The Arbitrage Credit is currently generating about 0.2 per unit of risk. If you would invest 2,163 in Longleaf Partners Fund on August 29, 2024 and sell it today you would earn a total of 405.00 from holding Longleaf Partners Fund or generate 18.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Longleaf Partners Fund vs. The Arbitrage Credit
Performance |
| Timeline |
| Longleaf Partners |
| Arbitrage Credit |
Longleaf Partners and Arbitrage Credit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Arbitrage Credit
The main advantage of trading using opposite Longleaf Partners and Arbitrage Credit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners position performs unexpectedly, Arbitrage Credit 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 Arbitrage Credit will offset losses from the drop in Arbitrage Credit's long position.| Longleaf Partners vs. Versatile Bond Portfolio | Longleaf Partners vs. California Bond Fund | Longleaf Partners vs. Barings Active Short | Longleaf Partners vs. Astor Longshort Fund |
| Arbitrage Credit vs. The Arbitrage Fund | Arbitrage Credit vs. The Arbitrage Event Driven | Arbitrage Credit vs. The Arbitrage Fund | Arbitrage Credit vs. The Arbitrage Event Driven |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |