Correlation Between Weitz Balanced and Balanced Fund

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

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

Diversification Opportunities for Weitz Balanced and Balanced Fund

0.96

Correlation Coefficient

Weitz Balanced  Balanced Fund

Almost no diversification

The 3 months correlation between Weitz and BALANCED is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Weitz Balanced and Balanced Fund Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Balanced and Weitz Balanced 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 Weitz Balanced are associated (or correlated) with Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Balanced has no effect on the direction of Weitz Balanced i.e., Weitz Balanced and Balanced Fund go up and down completely randomly.

Pair Corralation between Weitz Balanced and Balanced Fund

Assuming the 90 days horizon Weitz Balanced is expected to under-perform the Balanced Fund. But the mutual fund apears to be less risky and, when comparing its historical volatility, Weitz Balanced is 1.02 times less risky than Balanced Fund. The mutual fund trades about -0.15 of its potential returns per unit of risk. The Balanced Fund Balanced is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  1,774  in Balanced Fund Balanced on December 1, 2024 and sell it today you would lose (65.00) from holding Balanced Fund Balanced or give up 3.66% of portfolio value over 90 days.

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

Weitz Balanced  vs.  Balanced Fund Balanced

Weitz Balanced

Risk-Adjusted Performance

Very Weak

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

Balanced Fund Balanced

Risk-Adjusted Performance

Very Weak

Over the last 90 days Balanced Fund Balanced has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Balanced 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 Weitz Balanced and Balanced Fund

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

The idea behind Weitz Balanced and Balanced Fund Balanced 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 Transaction History module to view history of all your transactions and understand their impact on performance.