Correlation Between Stringer Growth and Third Avenue
Can any of the company-specific risk be diversified away by investing in both Stringer Growth and Third Avenue 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 Stringer Growth and Third Avenue into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stringer Growth Fund and Third Avenue Value, you can compare the effects of market volatilities on Stringer Growth and Third Avenue 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 Stringer Growth with a short position of Third Avenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stringer Growth and Third Avenue.
Diversification Opportunities for Stringer Growth and Third Avenue
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Stringer and Third is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Stringer Growth Fund and Third Avenue Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Value and Stringer Growth 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 Stringer Growth Fund are associated (or correlated) with Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Value has no effect on the direction of Stringer Growth i.e., Stringer Growth and Third Avenue go up and down completely randomly.
Pair Corralation between Stringer Growth and Third Avenue
Assuming the 90 days horizon Stringer Growth is expected to generate 2.4 times less return on investment than Third Avenue. In addition to that, Stringer Growth is 1.03 times more volatile than Third Avenue Value. It trades about 0.07 of its total potential returns per unit of risk. Third Avenue Value is currently generating about 0.17 per unit of volatility. If you would invest 5,714 in Third Avenue Value on October 21, 2024 and sell it today you would earn a total of 126.00 from holding Third Avenue Value or generate 2.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stringer Growth Fund vs. Third Avenue Value
Performance |
| Timeline |
| Stringer Growth |
| Third Avenue Value |
Stringer Growth and Third Avenue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stringer Growth and Third Avenue
The main advantage of trading using opposite Stringer Growth and Third Avenue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stringer Growth position performs unexpectedly, Third Avenue 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 Third Avenue will offset losses from the drop in Third Avenue's long position.| Stringer Growth vs. Siit High Yield | Stringer Growth vs. Artisan High Income | Stringer Growth vs. Ab High Income | Stringer Growth vs. Prudential High Yield |
| Third Avenue vs. Mid Cap Growth | Third Avenue vs. L Abbett Growth | Third Avenue vs. Stringer Growth Fund | Third Avenue vs. Small Pany Growth |
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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