Correlation Between Walthausen Small and Matthew 25
Can any of the company-specific risk be diversified away by investing in both Walthausen Small and Matthew 25 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 Walthausen Small and Matthew 25 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Walthausen Small Cap and Matthew 25 Fund, you can compare the effects of market volatilities on Walthausen Small and Matthew 25 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 Walthausen Small with a short position of Matthew 25. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walthausen Small and Matthew 25.
Diversification Opportunities for Walthausen Small and Matthew 25
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Walthausen and Matthew is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Walthausen Small Cap and Matthew 25 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthew 25 Fund and Walthausen Small 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 Walthausen Small Cap are associated (or correlated) with Matthew 25. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthew 25 Fund has no effect on the direction of Walthausen Small i.e., Walthausen Small and Matthew 25 go up and down completely randomly.
Pair Corralation between Walthausen Small and Matthew 25
Assuming the 90 days horizon Walthausen Small Cap is expected to generate 0.97 times more return on investment than Matthew 25. However, Walthausen Small Cap is 1.03 times less risky than Matthew 25. It trades about 0.31 of its potential returns per unit of risk. Matthew 25 Fund is currently generating about 0.25 per unit of risk. If you would invest 1,593 in Walthausen Small Cap on August 27, 2024 and sell it today you would earn a total of 169.00 from holding Walthausen Small Cap or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Walthausen Small Cap vs. Matthew 25 Fund
Performance |
| Timeline |
| Walthausen Small Cap |
| Matthew 25 Fund |
Walthausen Small and Matthew 25 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Walthausen Small and Matthew 25
The main advantage of trading using opposite Walthausen Small and Matthew 25 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Walthausen Small position performs unexpectedly, Matthew 25 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 Matthew 25 will offset losses from the drop in Matthew 25's long position.| Walthausen Small vs. Amg Southernsun Small | Walthausen Small vs. Wasatch Emerging Markets | Walthausen Small vs. Hodges Small Cap | Walthausen Small vs. Intrepid Endurance Fund |
| Matthew 25 vs. Buffalo Emerging Opportunities | Matthew 25 vs. Smead Value Fund | Matthew 25 vs. Hodges Small Cap | Matthew 25 vs. Amg Yacktman Focused |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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