Correlation Between Third Avenue and Clipper Fund
Can any of the company-specific risk be diversified away by investing in both Third Avenue and Clipper 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 Clipper Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Third Avenue Value and Clipper Fund Inc, you can compare the effects of market volatilities on Third Avenue and Clipper 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 Clipper Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Clipper Fund.
Diversification Opportunities for Third Avenue and Clipper Fund
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Third and Clipper is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Value and Clipper Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Fund 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 Value are associated (or correlated) with Clipper Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Fund has no effect on the direction of Third Avenue i.e., Third Avenue and Clipper Fund go up and down completely randomly.
Pair Corralation between Third Avenue and Clipper Fund
Assuming the 90 days horizon Third Avenue Value is expected to under-perform the Clipper Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Third Avenue Value is 1.4 times less risky than Clipper Fund. The mutual fund trades about -0.09 of its potential returns per unit of risk. The Clipper Fund Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 14,592 in Clipper Fund Inc on August 25, 2024 and sell it today you would earn a total of 732.00 from holding Clipper Fund Inc or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Third Avenue Value vs. Clipper Fund Inc
Performance |
| Timeline |
| Third Avenue Value |
| Clipper Fund |
Third Avenue and Clipper Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Third Avenue and Clipper Fund
The main advantage of trading using opposite Third Avenue and Clipper Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Third Avenue position performs unexpectedly, Clipper 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 Clipper Fund will offset losses from the drop in Clipper Fund's long position.| Third Avenue vs. Third Avenue Real | Third Avenue vs. Third Avenue Small Cap | Third Avenue vs. Rems International Real | Third Avenue vs. Third Avenue Real |
| Clipper Fund vs. Value Fund Value | Clipper Fund vs. Meridian Trarian Fund | Clipper Fund vs. Longleaf Partners Fund | Clipper Fund vs. Mairs Power 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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