Correlation Between Intrepid Capital and Cliffwater Corporate

Can any of the company-specific risk be diversified away by investing in both Intrepid Capital and Cliffwater Corporate 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 Intrepid Capital and Cliffwater Corporate into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Intrepid Capital Fund and Cliffwater Corporate Lending, you can compare the effects of market volatilities on Intrepid Capital and Cliffwater Corporate 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 Intrepid Capital with a short position of Cliffwater Corporate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intrepid Capital and Cliffwater Corporate.

Diversification Opportunities for Intrepid Capital and Cliffwater Corporate

0.29

Correlation Coefficient

Intrepid Capital  Cliffwater Corporate

Modest diversification

The 3 months correlation between Intrepid and Cliffwater is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Capital Fund and Cliffwater Corporate Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cliffwater Corporate and Intrepid Capital 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 Intrepid Capital Fund are associated (or correlated) with Cliffwater Corporate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cliffwater Corporate has no effect on the direction of Intrepid Capital i.e., Intrepid Capital and Cliffwater Corporate go up and down completely randomly.

Pair Corralation between Intrepid Capital and Cliffwater Corporate

Assuming the 90 days horizon Intrepid Capital Fund is expected to under-perform the Cliffwater Corporate. In addition to that, Intrepid Capital is 13.28 times more volatile than Cliffwater Corporate Lending. It trades about -0.09 of its total potential returns per unit of risk. Cliffwater Corporate Lending is currently generating about 0.88 per unit of volatility. If you would invest  1,055  in Cliffwater Corporate Lending on December 5, 2024 and sell it today you would earn a total of  26.00  from holding Cliffwater Corporate Lending or generate 2.46% return on investment over 90 days.

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

Intrepid Capital Fund  vs.  Cliffwater Corporate Lending

Intrepid Capital

Risk-Adjusted Performance

Very Weak

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

Cliffwater Corporate

Risk-Adjusted Performance

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in Cliffwater Corporate Lending are ranked lower than 69 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Cliffwater Corporate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intrepid Capital and Cliffwater Corporate

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

The idea behind Intrepid Capital Fund and Cliffwater Corporate Lending 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.