Correlation Between Longleaf Partners and Selected American
Can any of the company-specific risk be diversified away by investing in both Longleaf Partners and Selected American 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 Selected American 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 Selected American Shares, you can compare the effects of market volatilities on Longleaf Partners and Selected American 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 Selected American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longleaf Partners and Selected American.
Diversification Opportunities for Longleaf Partners and Selected American
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Longleaf and Selected is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Selected American Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected American Shares 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 Selected American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected American Shares has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Selected American go up and down completely randomly.
Pair Corralation between Longleaf Partners and Selected American
Assuming the 90 days horizon Longleaf Partners is expected to generate 2.43 times less return on investment than Selected American. But when comparing it to its historical volatility, Longleaf Partners Fund is 1.57 times less risky than Selected American. It trades about 0.1 of its potential returns per unit of risk. Selected American Shares is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 4,238 in Selected American Shares on August 26, 2024 and sell it today you would earn a total of 165.00 from holding Selected American Shares or generate 3.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longleaf Partners Fund vs. Selected American Shares
Performance |
| Timeline |
| Longleaf Partners |
| Selected American Shares |
Longleaf Partners and Selected American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longleaf Partners and Selected American
The main advantage of trading using opposite Longleaf Partners and Selected American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longleaf Partners position performs unexpectedly, Selected American 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 Selected American will offset losses from the drop in Selected American's long position.| Longleaf Partners vs. Federated Equity Income | Longleaf Partners vs. Balanced Fund Retail | Longleaf Partners vs. Small Cap Equity | Longleaf Partners vs. Ms Global Fixed |
| Selected American vs. Marsico Focus Fund | Selected American vs. Artisan International Fund | Selected American vs. Third Avenue Value | Selected American vs. Oakmark Select 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |