Correlation Between Tweedy Browne and Clipper Fund

Can any of the company-specific risk be diversified away by investing in both Tweedy Browne and Clipper Fund 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 Tweedy Browne and Clipper Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tweedy Browne Global and Clipper Fund Inc, you can compare the effects of market volatilities on Tweedy Browne and Clipper Fund 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 Tweedy Browne with a short position of Clipper Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tweedy Browne and Clipper Fund.

Diversification Opportunities for Tweedy Browne and Clipper Fund

0.82

Correlation Coefficient

Tweedy Browne  Clipper Fund

Very poor diversification

The 3 months correlation between TWEEDY and Clipper is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Tweedy Browne Global and Clipper Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Fund and Tweedy Browne 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 Tweedy Browne Global are associated (or correlated) with Clipper Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Fund has no effect on the direction of Tweedy Browne i.e., Tweedy Browne and Clipper Fund go up and down completely randomly.

Pair Corralation between Tweedy Browne and Clipper Fund

Assuming the 90 days horizon Tweedy Browne is expected to generate 1.58 times less return on investment than Clipper Fund. But when comparing it to its historical volatility, Tweedy Browne Global is 1.96 times less risky than Clipper Fund. It trades about 0.32 of its potential returns per unit of risk. Clipper Fund Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  13,836  in Clipper Fund Inc on October 26, 2024 and sell it today you would earn a total of  559.00  from holding Clipper Fund Inc or generate 4.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

Tweedy Browne Global  vs.  Clipper Fund Inc

Tweedy Browne Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tweedy Browne Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Clipper Fund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tweedy Browne and Clipper Fund

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

The idea behind Tweedy Browne Global and Clipper Fund Inc 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.