Correlation Between Heartland Value and Appleseed Fund

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

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

Diversification Opportunities for Heartland Value and Appleseed Fund

0.79

Correlation Coefficient

Heartland Value  Appleseed Fund

Poor diversification

The 3 months correlation between Heartland and Appleseed is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Appleseed Fund Appleseed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appleseed Fund Appleseed and Heartland 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 Heartland Value Plus are associated (or correlated) with Appleseed Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appleseed Fund Appleseed has no effect on the direction of Heartland Value i.e., Heartland Value and Appleseed Fund go up and down completely randomly.

Pair Corralation between Heartland Value and Appleseed Fund

Assuming the 90 days horizon Heartland Value is expected to generate 1.03 times less return on investment than Appleseed Fund. In addition to that, Heartland Value is 2.27 times more volatile than Appleseed Fund Appleseed. It trades about 0.17 of its total potential returns per unit of risk. Appleseed Fund Appleseed is currently generating about 0.39 per unit of volatility. If you would invest  1,402  in Appleseed Fund Appleseed on October 22, 2024 and sell it today you would earn a total of  43.00  from holding Appleseed Fund Appleseed or generate 3.07% return on investment over 90 days.

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

Heartland Value Plus  vs.  Appleseed Fund Appleseed

Heartland Value Plus

Risk-Adjusted Performance

0 of 100

Very Weak

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

Appleseed Fund Appleseed

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Appleseed Fund Appleseed are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Appleseed Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Heartland Value and Appleseed Fund

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

The idea behind Heartland Value Plus and Appleseed Fund Appleseed 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.