Correlation Between Heartland Value and Research Portfolio

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

Diversification Opportunities for Heartland Value and Research Portfolio

0.89

Correlation Coefficient

Heartland Value  Research Portfolio

Very poor diversification

The 3 months correlation between Heartland and Research is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Research Portfolio Institution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Research Portfolio 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 Research Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Research Portfolio has no effect on the direction of Heartland Value i.e., Heartland Value and Research Portfolio go up and down completely randomly.

Pair Corralation between Heartland Value and Research Portfolio

Assuming the 90 days horizon Heartland Value Plus is expected to generate 0.8 times more return on investment than Research Portfolio. However, Heartland Value Plus is 1.25 times less risky than Research Portfolio. It trades about -0.12 of its potential returns per unit of risk. Research Portfolio Institutional is currently generating about -0.11 per unit of risk. If you would invest  3,618  in Heartland Value Plus on December 24, 2024 and sell it today you would lose (308.00) from holding Heartland Value Plus or give up 8.51% of portfolio value over 90 days.

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

Heartland Value Plus  vs.  Research Portfolio Institution

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 latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Research Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Research Portfolio Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Heartland Value and Research Portfolio

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

The idea behind Heartland Value Plus and Research Portfolio Institutional 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.