Correlation Between Sequoia Fund and Longleaf Partners
Can any of the company-specific risk be diversified away by investing in both Sequoia 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 Sequoia 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 Sequoia Fund Inc and Longleaf Partners International, you can compare the effects of market volatilities on Sequoia 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 Sequoia Fund with a short position of Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sequoia Fund and Longleaf Partners.
Diversification Opportunities for Sequoia Fund and Longleaf Partners
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sequoia and Longleaf is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sequoia Fund Inc and Longleaf Partners Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners and Sequoia 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 Sequoia Fund Inc 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 Sequoia Fund i.e., Sequoia Fund and Longleaf Partners go up and down completely randomly.
Pair Corralation between Sequoia Fund and Longleaf Partners
Assuming the 90 days horizon Sequoia Fund Inc is expected to generate 0.94 times more return on investment than Longleaf Partners. However, Sequoia Fund Inc is 1.07 times less risky than Longleaf Partners. It trades about 0.12 of its potential returns per unit of risk. Longleaf Partners International is currently generating about 0.02 per unit of risk. If you would invest 12,354 in Sequoia Fund Inc on December 1, 2024 and sell it today you would earn a total of 7,272 from holding Sequoia Fund Inc or generate 58.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sequoia Fund Inc vs. Longleaf Partners Internationa
Performance |
| Timeline |
| Sequoia Fund |
| Longleaf Partners |
Sequoia Fund and Longleaf Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sequoia Fund and Longleaf Partners
The main advantage of trading using opposite Sequoia Fund and Longleaf Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sequoia 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.| Sequoia Fund vs. Longleaf Partners Fund | Sequoia Fund vs. The Fairholme Fund | Sequoia Fund vs. Amg Yacktman Fund | Sequoia Fund vs. Clipper Fund Inc |
| Longleaf Partners vs. Knights Of Umbus | Longleaf Partners vs. Guidemark Large Cap | Longleaf Partners vs. T Rowe Price | Longleaf Partners vs. Calvert Moderate Allocation |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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