Correlation Between Tweedy Browne and Sequoia Fund

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

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

Diversification Opportunities for Tweedy Browne and Sequoia Fund

-0.02

Correlation Coefficient

Tweedy Browne  Sequoia Fund

Good diversification

The 3 months correlation between Tweedy and Sequoia is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tweedy Browne Worldwide and Sequoia Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sequoia 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 Worldwide are associated (or correlated) with Sequoia Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sequoia Fund has no effect on the direction of Tweedy Browne i.e., Tweedy Browne and Sequoia Fund go up and down completely randomly.

Pair Corralation between Tweedy Browne and Sequoia Fund

Assuming the 90 days horizon Tweedy Browne is expected to generate 19.88 times less return on investment than Sequoia Fund. But when comparing it to its historical volatility, Tweedy Browne Worldwide is 1.23 times less risky than Sequoia Fund. It trades about 0.01 of its potential returns per unit of risk. Sequoia Fund Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  12,536  in Sequoia Fund Inc on October 11, 2024 and sell it today you would earn a total of  5,910  from holding Sequoia Fund Inc or generate 47.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Tweedy Browne Worldwide  vs.  Sequoia Fund Inc

Tweedy Browne Worldwide

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sequoia Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sequoia Fund Inc has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sequoia 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 Sequoia Fund

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

The idea behind Tweedy Browne Worldwide and Sequoia 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.

Check out your portfolio center.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.