Correlation Between Selected American and Muhlenkamp Fund
Can any of the company-specific risk be diversified away by investing in both Selected American and Muhlenkamp Fund 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 Selected American and Muhlenkamp Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Selected American Shares and Muhlenkamp Fund Institutional, you can compare the effects of market volatilities on Selected American and Muhlenkamp Fund 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 Selected American with a short position of Muhlenkamp Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Selected American and Muhlenkamp Fund.
Diversification Opportunities for Selected American and Muhlenkamp Fund
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Selected and Muhlenkamp is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Selected American Shares and Muhlenkamp Fund Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muhlenkamp Fund Inst and Selected American 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 Selected American Shares are associated (or correlated) with Muhlenkamp Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muhlenkamp Fund Inst has no effect on the direction of Selected American i.e., Selected American and Muhlenkamp Fund go up and down completely randomly.
Pair Corralation between Selected American and Muhlenkamp Fund
Assuming the 90 days horizon Selected American is expected to generate 1.3 times less return on investment than Muhlenkamp Fund. In addition to that, Selected American is 1.21 times more volatile than Muhlenkamp Fund Institutional. It trades about 0.15 of its total potential returns per unit of risk. Muhlenkamp Fund Institutional is currently generating about 0.23 per unit of volatility. If you would invest 7,112 in Muhlenkamp Fund Institutional on August 30, 2024 and sell it today you would earn a total of 336.00 from holding Muhlenkamp Fund Institutional or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Selected American Shares vs. Muhlenkamp Fund Institutional
Performance |
| Timeline |
| Selected American Shares |
| Muhlenkamp Fund Inst |
Selected American and Muhlenkamp Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Selected American and Muhlenkamp Fund
The main advantage of trading using opposite Selected American and Muhlenkamp Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Selected American position performs unexpectedly, Muhlenkamp Fund 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 Muhlenkamp Fund will offset losses from the drop in Muhlenkamp Fund's long position.| Selected American vs. Marsico Focus Fund | Selected American vs. Artisan International Fund | Selected American vs. Third Avenue Value | Selected American vs. Oakmark Select Fund |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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