Correlation Between Muhlenkamp Fund and Fam Equity-income
Can any of the company-specific risk be diversified away by investing in both Muhlenkamp Fund and Fam Equity-income 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 Muhlenkamp Fund and Fam Equity-income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Muhlenkamp Fund Institutional and Fam Equity Income Fund, you can compare the effects of market volatilities on Muhlenkamp Fund and Fam Equity-income 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 Muhlenkamp Fund with a short position of Fam Equity-income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muhlenkamp Fund and Fam Equity-income.
Diversification Opportunities for Muhlenkamp Fund and Fam Equity-income
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Muhlenkamp and Fam is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Muhlenkamp Fund Institutional and Fam Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fam Equity Income and Muhlenkamp Fund 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 Muhlenkamp Fund Institutional are associated (or correlated) with Fam Equity-income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fam Equity Income has no effect on the direction of Muhlenkamp Fund i.e., Muhlenkamp Fund and Fam Equity-income go up and down completely randomly.
Pair Corralation between Muhlenkamp Fund and Fam Equity-income
Assuming the 90 days horizon Muhlenkamp Fund is expected to generate 1.06 times less return on investment than Fam Equity-income. But when comparing it to its historical volatility, Muhlenkamp Fund Institutional is 1.1 times less risky than Fam Equity-income. It trades about 0.09 of its potential returns per unit of risk. Fam Equity Income Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,578 in Fam Equity Income Fund on August 28, 2024 and sell it today you would earn a total of 1,666 from holding Fam Equity Income Fund or generate 36.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Muhlenkamp Fund Institutional vs. Fam Equity Income Fund
Performance |
| Timeline |
| Muhlenkamp Fund Inst |
| Fam Equity Income |
Muhlenkamp Fund and Fam Equity-income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Muhlenkamp Fund and Fam Equity-income
The main advantage of trading using opposite Muhlenkamp Fund and Fam Equity-income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Muhlenkamp Fund position performs unexpectedly, Fam Equity-income 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 Fam Equity-income will offset losses from the drop in Fam Equity-income's long position.| Muhlenkamp Fund vs. Third Avenue Value | Muhlenkamp Fund vs. Meridian Growth Fund | Muhlenkamp Fund vs. Heartland Value Fund | Muhlenkamp Fund vs. Mairs Power Growth |
| Fam Equity-income vs. Meridian Growth Fund | Fam Equity-income vs. Muhlenkamp Fund Institutional | Fam Equity-income vs. Royce Pennsylvania Mutual | Fam Equity-income vs. Madison Mid 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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