Correlation Between Muhlenkamp Fund and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both Muhlenkamp Fund and Longleaf Partners 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 Longleaf Partners 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 Longleaf Partners Fund, you can compare the effects of market volatilities on Muhlenkamp Fund and Longleaf Partners 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 Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Muhlenkamp Fund and Longleaf Partners.
Diversification Opportunities for Muhlenkamp Fund and Longleaf Partners
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Muhlenkamp and Longleaf is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Muhlenkamp Fund Institutional and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners 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 Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of Muhlenkamp Fund i.e., Muhlenkamp Fund and Longleaf Partners go up and down completely randomly.
Pair Corralation between Muhlenkamp Fund and Longleaf Partners
Assuming the 90 days horizon Muhlenkamp Fund is expected to generate 1.05 times less return on investment than Longleaf Partners. But when comparing it to its historical volatility, Muhlenkamp Fund Institutional is 1.03 times less risky than Longleaf Partners. It trades about 0.12 of its potential returns per unit of risk. Longleaf Partners Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,955 in Longleaf Partners Fund on August 26, 2024 and sell it today you would earn a total of 611.00 from holding Longleaf Partners Fund or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Muhlenkamp Fund Institutional vs. Longleaf Partners Fund
Performance |
| Timeline |
| Muhlenkamp Fund Inst |
| Longleaf Partners |
Muhlenkamp Fund and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Muhlenkamp Fund and Longleaf Partners
The main advantage of trading using opposite Muhlenkamp Fund and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Muhlenkamp Fund position performs unexpectedly, Longleaf Partners 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 Longleaf Partners will offset losses from the drop in Longleaf Partners' 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 |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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