Correlation Between Marshfield Concentrated and First American

Can any of the company-specific risk be diversified away by investing in both Marshfield Concentrated and First American 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 Marshfield Concentrated and First American into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Marshfield Centrated Opportunity and First American Funds, you can compare the effects of market volatilities on Marshfield Concentrated and First American 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 Marshfield Concentrated with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marshfield Concentrated and First American.

Diversification Opportunities for Marshfield Concentrated and First American

0.34

Correlation Coefficient

Marshfield Concentrated  First American

Weak diversification

The 3 months correlation between Marshfield and First is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Marshfield Centrated Opportuni and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds and Marshfield Concentrated 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 Marshfield Centrated Opportunity are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of Marshfield Concentrated i.e., Marshfield Concentrated and First American go up and down completely randomly.

Pair Corralation between Marshfield Concentrated and First American

If you would invest  96.00  in First American Funds on October 2, 2024 and sell it today you would earn a total of  4.00  from holding First American Funds or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.4%
Values	Daily Returns

Marshfield Centrated Opportuni  vs.  First American Funds

Marshfield Concentrated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marshfield Centrated Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Marshfield Concentrated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

First American Funds

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Marshfield Concentrated and First American

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

The idea behind Marshfield Centrated Opportunity and First American Funds 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.