Correlation Between Heartland Value and Us Small

Can any of the company-specific risk be diversified away by investing in both Heartland Value and Us Small 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 Us Small 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 Us Small Cap, you can compare the effects of market volatilities on Heartland Value and Us Small 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 Us Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heartland Value and Us Small.

Diversification Opportunities for Heartland Value and Us Small

0.95

Correlation Coefficient

Heartland Value  Us Small

Almost no diversification

The 3 months correlation between HEARTLAND and DFSTX is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Us Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Small Cap 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 Us Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Small Cap has no effect on the direction of Heartland Value i.e., Heartland Value and Us Small go up and down completely randomly.

Pair Corralation between Heartland Value and Us Small

Assuming the 90 days horizon Heartland Value Plus is expected to under-perform the Us Small. In addition to that, Heartland Value is 1.1 times more volatile than Us Small Cap. It trades about -0.21 of its total potential returns per unit of risk. Us Small Cap is currently generating about -0.19 per unit of volatility. If you would invest  5,304  in Us Small Cap on December 4, 2024 and sell it today you would lose (619.00) from holding Us Small Cap or give up 11.67% of portfolio value over 90 days.

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

Heartland Value Plus  vs.  Us Small Cap

Heartland Value Plus

Risk-Adjusted Performance

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 weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Us Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Heartland Value and Us Small

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

The idea behind Heartland Value Plus and Us Small 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.