Correlation Between Longleaf Partners and Buffalo Small
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners and Buffalo Small 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 Buffalo Small 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 Buffalo Small Cap, you can compare the effects of market volatilities on Longleaf Partners and Buffalo Small 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 Buffalo Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Buffalo Small.
Diversification Opportunities for Longleaf Partners and Buffalo Small
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Longleaf and Buffalo is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Buffalo Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Small Cap 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 Buffalo Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Small Cap has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Buffalo Small go up and down completely randomly.
Pair Corralation between Longleaf Partners and Buffalo Small
Assuming the 90 days horizon Longleaf Partners Fund is expected to generate 0.77 times more return on investment than Buffalo Small. However, Longleaf Partners Fund is 1.3 times less risky than Buffalo Small. It trades about 0.07 of its potential returns per unit of risk. Buffalo Small Cap is currently generating about 0.03 per unit of risk. If you would invest 1,851 in Longleaf Partners Fund on August 30, 2024 and sell it today you would earn a total of 712.00 from holding Longleaf Partners Fund or generate 38.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Fund vs. Buffalo Small Cap
Performance |
| Timeline |
| Longleaf Partners |
| Buffalo Small Cap |
Longleaf Partners and Buffalo Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Buffalo Small
The main advantage of trading using opposite Longleaf Partners and Buffalo Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners position performs unexpectedly, Buffalo Small 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 Buffalo Small will offset losses from the drop in Buffalo Small'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 |
| Buffalo Small vs. John Hancock Money | Buffalo Small vs. Financial Industries Fund | Buffalo Small vs. T Rowe Price | Buffalo Small vs. Blrc Sgy Mnp |
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.
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