Correlation Between Longleaf Partners and Total Return
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners and Total Return 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 Total Return 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 Total Return Fund, you can compare the effects of market volatilities on Longleaf Partners and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Total Return.
Diversification Opportunities for Longleaf Partners and Total Return
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Longleaf and TOTAL is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Total Return go up and down completely randomly.
Pair Corralation between Longleaf Partners and Total Return
Assuming the 90 days horizon Longleaf Partners Fund is expected to generate 1.9 times more return on investment than Total Return. However, Longleaf Partners is 1.9 times more volatile than Total Return Fund. It trades about 0.06 of its potential returns per unit of risk. Total Return Fund is currently generating about 0.09 per unit of risk. If you would invest 2,540 in Longleaf Partners Fund on August 30, 2024 and sell it today you would earn a total of 23.00 from holding Longleaf Partners Fund or generate 0.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Fund vs. Total Return Fund
Performance |
| Timeline |
| Longleaf Partners |
| Total Return |
Longleaf Partners and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Total Return
The main advantage of trading using opposite Longleaf Partners and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Longleaf Partners vs. Small Cap Stock | Longleaf Partners vs. Guggenheim Diversified Income | Longleaf Partners vs. Tiaa Cref Small Cap Blend | Longleaf Partners vs. Huber Capital Diversified |
| Total Return vs. Washington Mutual Investors | Total Return vs. Touchstone Large Cap | Total Return vs. T Rowe Price | Total Return vs. Fundamental Large Cap |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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