Correlation Between Buffalo Growth and Buffalo International

Can any of the company-specific risk be diversified away by investing in both Buffalo Growth and Buffalo International 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 Buffalo Growth and Buffalo International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Buffalo Growth Fund and Buffalo International, you can compare the effects of market volatilities on Buffalo Growth and Buffalo International 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 Buffalo Growth with a short position of Buffalo International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo Growth and Buffalo International.

Diversification Opportunities for Buffalo Growth and Buffalo International

-0.3

Correlation Coefficient

Buffalo Growth  Buffalo International

Very good diversification

The 3 months correlation between Buffalo and Buffalo is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo Growth Fund and Buffalo International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo International and Buffalo 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 Buffalo Growth Fund are associated (or correlated) with Buffalo International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo International has no effect on the direction of Buffalo Growth i.e., Buffalo Growth and Buffalo International go up and down completely randomly.

Pair Corralation between Buffalo Growth and Buffalo International

Assuming the 90 days horizon Buffalo Growth Fund is expected to under-perform the Buffalo International. In addition to that, Buffalo Growth is 1.28 times more volatile than Buffalo International. It trades about -0.08 of its total potential returns per unit of risk. Buffalo International is currently generating about 0.14 per unit of volatility. If you would invest  2,079  in Buffalo International on December 27, 2024 and sell it today you would earn a total of  169.00  from holding Buffalo International or generate 8.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Buffalo Growth Fund  vs.  Buffalo International

Buffalo Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Buffalo Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Buffalo Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Buffalo International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Buffalo International are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Buffalo International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Buffalo Growth and Buffalo International

The main advantage of trading using opposite Buffalo Growth and Buffalo International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo Growth position performs unexpectedly, Buffalo International 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 Buffalo International will offset losses from the drop in Buffalo International's long position.

The idea behind Buffalo Growth Fund and Buffalo International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.