Correlation Between Heartland Value and Aston Montag

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

Diversification Opportunities for Heartland Value and Aston Montag

0.65

Correlation Coefficient

Heartland Value  Aston Montag

Poor diversification

The 3 months correlation between HEARTLAND and Aston is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Value Plus and Aston Montag Caldwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aston Montag Caldwell 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 Aston Montag. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aston Montag Caldwell has no effect on the direction of Heartland Value i.e., Heartland Value and Aston Montag go up and down completely randomly.

Pair Corralation between Heartland Value and Aston Montag

Assuming the 90 days horizon Heartland Value Plus is expected to under-perform the Aston Montag. But the mutual fund apears to be less risky and, when comparing its historical volatility, Heartland Value Plus is 1.31 times less risky than Aston Montag. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Aston Montag Caldwell is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest  1,370  in Aston Montag Caldwell on November 28, 2024 and sell it today you would lose (141.00) from holding Aston Montag Caldwell or give up 10.29% of portfolio value over 90 days.

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

Heartland Value Plus  vs.  Aston Montag Caldwell

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 March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Aston Montag Caldwell

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aston Montag Caldwell 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 Heartland Value and Aston Montag

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

The idea behind Heartland Value Plus and Aston Montag Caldwell 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.