Correlation Between Third Avenue and Muhlenkamp Fund
Can any of the company-specific risk be diversified away by investing in both Third Avenue 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 Third Avenue and Muhlenkamp Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Real and Muhlenkamp Fund Institutional, you can compare the effects of market volatilities on Third Avenue 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 Third Avenue with a short position of Muhlenkamp Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Muhlenkamp Fund.
Diversification Opportunities for Third Avenue and Muhlenkamp Fund
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Third and Muhlenkamp is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Real 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 Third Avenue 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 Third Avenue Real 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 Third Avenue i.e., Third Avenue and Muhlenkamp Fund go up and down completely randomly.
Pair Corralation between Third Avenue and Muhlenkamp Fund
Assuming the 90 days horizon Third Avenue Real is expected to generate 1.26 times more return on investment than Muhlenkamp Fund. However, Third Avenue is 1.26 times more volatile than Muhlenkamp Fund Institutional. It trades about 0.37 of its potential returns per unit of risk. Muhlenkamp Fund Institutional is currently generating about 0.23 per unit of risk. If you would invest 2,397 in Third Avenue Real on August 30, 2024 and sell it today you would earn a total of 232.00 from holding Third Avenue Real or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Third Avenue Real vs. Muhlenkamp Fund Institutional
Performance |
| Timeline |
| Third Avenue Real |
| Muhlenkamp Fund Inst |
Third Avenue and Muhlenkamp Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Muhlenkamp Fund
The main advantage of trading using opposite Third Avenue and Muhlenkamp Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue 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.| Third Avenue vs. HUMANA INC | Third Avenue vs. Aquagold International | Third Avenue vs. Barloworld Ltd ADR | Third Avenue vs. Morningstar Unconstrained Allocation |
| Muhlenkamp Fund vs. Dodge Cox Stock | Muhlenkamp Fund vs. American Mutual Fund | Muhlenkamp Fund vs. American Funds American | Muhlenkamp Fund vs. American Funds American |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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