Correlation Between Disciplined Value and Manning Napier

Can any of the company-specific risk be diversified away by investing in both Disciplined Value and Manning Napier 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 Disciplined Value and Manning Napier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Disciplined Value Series and Manning Napier Equity, you can compare the effects of market volatilities on Disciplined Value and Manning Napier 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 Disciplined Value with a short position of Manning Napier. Check out your portfolio center. Please also check ongoing floating volatility patterns of Disciplined Value and Manning Napier.

Diversification Opportunities for Disciplined Value and Manning Napier

0.89

Correlation Coefficient

Disciplined Value  Manning Napier

Very poor diversification

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

Pair Corralation between Disciplined Value and Manning Napier

Assuming the 90 days horizon Disciplined Value is expected to generate 1.56 times less return on investment than Manning Napier. In addition to that, Disciplined Value is 1.13 times more volatile than Manning Napier Equity. It trades about 0.1 of its total potential returns per unit of risk. Manning Napier Equity is currently generating about 0.17 per unit of volatility. If you would invest  1,244  in Manning Napier Equity on September 13, 2024 and sell it today you would earn a total of  95.00  from holding Manning Napier Equity or generate 7.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Disciplined Value Series  vs.  Manning Napier Equity

Disciplined Value Series

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Disciplined Value Series are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Disciplined Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Manning Napier Equity

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Manning Napier Equity are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Manning Napier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Disciplined Value and Manning Napier

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

The idea behind Disciplined Value Series and Manning Napier Equity 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.