Correlation Between Frank Value and Leigh Baldwin

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

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

Diversification Opportunities for Frank Value and Leigh Baldwin

0.59

Correlation Coefficient

Frank Value  Leigh Baldwin

Very weak diversification

The 3 months correlation between Frank and Leigh is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Frank Value Fund and Leigh Baldwin Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leigh Baldwin Total and Frank Value 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 Frank Value Fund are associated (or correlated) with Leigh Baldwin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leigh Baldwin Total has no effect on the direction of Frank Value i.e., Frank Value and Leigh Baldwin go up and down completely randomly.

Pair Corralation between Frank Value and Leigh Baldwin

Assuming the 90 days horizon Frank Value Fund is expected to under-perform the Leigh Baldwin. In addition to that, Frank Value is 4.98 times more volatile than Leigh Baldwin Total. It trades about -0.03 of its total potential returns per unit of risk. Leigh Baldwin Total is currently generating about -0.06 per unit of volatility. If you would invest  1,077  in Leigh Baldwin Total on December 20, 2024 and sell it today you would lose (8.00) from holding Leigh Baldwin Total or give up 0.74% of portfolio value over 90 days.

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

Frank Value Fund  vs.  Leigh Baldwin Total

Frank Value Fund

Risk-Adjusted Performance

Very Weak

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

Leigh Baldwin Total

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Frank Value and Leigh Baldwin

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

The idea behind Frank Value Fund and Leigh Baldwin Total 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.