Correlation Between Total Return and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both Total Return 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 Total Return and Longleaf Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Return Fund and Longleaf Partners Fund, you can compare the effects of market volatilities on Total Return 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 Total Return with a short position of Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Return and Longleaf Partners.
Diversification Opportunities for Total Return and Longleaf Partners
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Total and Longleaf is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Fund and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners and Total Return 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 Total Return Fund 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 Total Return i.e., Total Return and Longleaf Partners go up and down completely randomly.
Pair Corralation between Total Return and Longleaf Partners
Assuming the 90 days horizon Total Return Fund is expected to under-perform the Longleaf Partners. But the mutual fund apears to be less risky and, when comparing its historical volatility, Total Return Fund is 2.31 times less risky than Longleaf Partners. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Longleaf Partners Fund is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2,526 in Longleaf Partners Fund on August 26, 2024 and sell it today you would earn a total of 40.00 from holding Longleaf Partners Fund or generate 1.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Return Fund vs. Longleaf Partners Fund
Performance |
| Timeline |
| Total Return |
| Longleaf Partners |
Total Return and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Return and Longleaf Partners
The main advantage of trading using opposite Total Return and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Return 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.| Total Return vs. Pender Real Estate | Total Return vs. Real Estate Fund | Total Return vs. Great West Real Estate | Total Return vs. Us Real Estate |
| Longleaf Partners vs. Federated Equity Income | Longleaf Partners vs. Balanced Fund Retail | Longleaf Partners vs. Small Cap Equity | Longleaf Partners vs. Ms Global Fixed |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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