Correlation Between Paradigm Value and Buffalo Emerging
Can any of the company-specific risk be diversified away by investing in both Paradigm Value and Buffalo Emerging 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 Paradigm Value and Buffalo Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paradigm Value Fund and Buffalo Emerging Opportunities, you can compare the effects of market volatilities on Paradigm Value and Buffalo Emerging 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 Paradigm Value with a short position of Buffalo Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paradigm Value and Buffalo Emerging.
Diversification Opportunities for Paradigm Value and Buffalo Emerging
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Paradigm and Buffalo is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Paradigm Value Fund and Buffalo Emerging Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Emerging Opp and Paradigm Value 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 Paradigm Value Fund are associated (or correlated) with Buffalo Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Emerging Opp has no effect on the direction of Paradigm Value i.e., Paradigm Value and Buffalo Emerging go up and down completely randomly.
Pair Corralation between Paradigm Value and Buffalo Emerging
Assuming the 90 days horizon Paradigm Value is expected to generate 1.08 times less return on investment than Buffalo Emerging. In addition to that, Paradigm Value is 1.07 times more volatile than Buffalo Emerging Opportunities. It trades about 0.07 of its total potential returns per unit of risk. Buffalo Emerging Opportunities is currently generating about 0.09 per unit of volatility. If you would invest 1,550 in Buffalo Emerging Opportunities on September 2, 2024 and sell it today you would earn a total of 217.00 from holding Buffalo Emerging Opportunities or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paradigm Value Fund vs. Buffalo Emerging Opportunities
Performance |
| Timeline |
| Paradigm Value |
| Buffalo Emerging Opp |
Paradigm Value and Buffalo Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paradigm Value and Buffalo Emerging
The main advantage of trading using opposite Paradigm Value and Buffalo Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paradigm Value position performs unexpectedly, Buffalo Emerging 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 Buffalo Emerging will offset losses from the drop in Buffalo Emerging's long position.| Paradigm Value vs. Royce Small Cap Value | Paradigm Value vs. Royce Smaller Companies Growth | Paradigm Value vs. Kinetics Paradigm Fund | Paradigm Value vs. Tcw Relative Value |
| Buffalo Emerging vs. Buffalo Mid Cap | Buffalo Emerging vs. Buffalo Small Cap | Buffalo Emerging vs. Buffalo Large Cap | Buffalo Emerging vs. Buffalo Discovery 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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