Correlation Between Buffalo International and Buffalo Large

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

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

Diversification Opportunities for Buffalo International and Buffalo Large

-0.23

Correlation Coefficient

Buffalo International  Buffalo Large

Very good diversification

The 3 months correlation between Buffalo and Buffalo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo International and Buffalo Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buffalo Large Cap and Buffalo International 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 International are associated (or correlated) with Buffalo Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buffalo Large Cap has no effect on the direction of Buffalo International i.e., Buffalo International and Buffalo Large go up and down completely randomly.

Pair Corralation between Buffalo International and Buffalo Large

Assuming the 90 days horizon Buffalo International is expected to generate 0.74 times more return on investment than Buffalo Large. However, Buffalo International is 1.35 times less risky than Buffalo Large. It trades about 0.1 of its potential returns per unit of risk. Buffalo Large Cap is currently generating about -0.08 per unit of risk. If you would invest  2,062  in Buffalo International on December 30, 2024 and sell it today you would earn a total of  129.00  from holding Buffalo International or generate 6.26% return on investment over 90 days.

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

Buffalo International  vs.  Buffalo Large Cap

Buffalo International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Buffalo International are ranked lower than 8 (%) 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.

Buffalo Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Buffalo Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Buffalo International and Buffalo Large

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

The idea behind Buffalo International and Buffalo Large Cap 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.