Correlation Between Intrepid Capital and James Balanced

Can any of the company-specific risk be diversified away by investing in both Intrepid Capital and James Balanced 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 James Balanced 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 James Balanced Golden, you can compare the effects of market volatilities on Intrepid Capital and James Balanced 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 James Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intrepid Capital and James Balanced.

Diversification Opportunities for Intrepid Capital and James Balanced

0.33

Correlation Coefficient

Intrepid Capital  James Balanced

Weak diversification

The 3 months correlation between Intrepid and James is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Capital Fund and James Balanced Golden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Balanced Golden 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 James Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Balanced Golden has no effect on the direction of Intrepid Capital i.e., Intrepid Capital and James Balanced go up and down completely randomly.

Pair Corralation between Intrepid Capital and James Balanced

Assuming the 90 days horizon Intrepid Capital Fund is expected to generate 1.23 times more return on investment than James Balanced. However, Intrepid Capital is 1.23 times more volatile than James Balanced Golden. It trades about 0.21 of its potential returns per unit of risk. James Balanced Golden is currently generating about -0.02 per unit of risk. If you would invest  1,203  in Intrepid Capital Fund on September 17, 2024 and sell it today you would earn a total of  95.00  from holding Intrepid Capital Fund or generate 7.9% 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.  James Balanced Golden

Intrepid Capital

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Capital Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Intrepid Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

James Balanced Golden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days James Balanced Golden has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, James Balanced 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 James Balanced

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

The idea behind Intrepid Capital Fund and James Balanced Golden 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.