Correlation Between Mairs Power and Longleaf Partners

Can any of the company-specific risk be diversified away by investing in both Mairs Power and Longleaf Partners 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 Mairs Power and Longleaf Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mairs Power Growth and Longleaf Partners Fund, you can compare the effects of market volatilities on Mairs Power and Longleaf Partners 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 Mairs Power with a short position of Longleaf Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mairs Power and Longleaf Partners.

Diversification Opportunities for Mairs Power and Longleaf Partners

0.92

Correlation Coefficient

Mairs Power  Longleaf Partners

Almost no diversification

The 3 months correlation between Mairs and Longleaf is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Mairs Power Growth and Longleaf Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longleaf Partners and Mairs Power 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 Mairs Power Growth are associated (or correlated) with Longleaf Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longleaf Partners has no effect on the direction of Mairs Power i.e., Mairs Power and Longleaf Partners go up and down completely randomly.

Pair Corralation between Mairs Power and Longleaf Partners

Assuming the 90 days horizon Mairs Power Growth is expected to generate 1.17 times more return on investment than Longleaf Partners. However, Mairs Power is 1.17 times more volatile than Longleaf Partners Fund. It trades about 0.16 of its potential returns per unit of risk. Longleaf Partners Fund is currently generating about 0.17 per unit of risk. If you would invest  16,943  in Mairs Power Growth on September 3, 2024 and sell it today you would earn a total of  1,397  from holding Mairs Power Growth or generate 8.25% return on investment over 90 days.

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

Mairs Power Growth  vs.  Longleaf Partners Fund

Mairs Power Growth

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mairs Power Growth are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Mairs Power may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Longleaf Partners

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Mairs Power and Longleaf Partners

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

The idea behind Mairs Power Growth and Longleaf Partners Fund 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.