Correlation Between Weitz Balanced and Core Plus

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

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

Diversification Opportunities for Weitz Balanced and Core Plus

0.58

Correlation Coefficient

Weitz Balanced  Core Plus

Very weak diversification

The 3 months correlation between Weitz and Core is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Weitz Balanced and Core Plus Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Core Plus Income 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 Core Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Core Plus Income has no effect on the direction of Weitz Balanced i.e., Weitz Balanced and Core Plus go up and down completely randomly.

Pair Corralation between Weitz Balanced and Core Plus

Assuming the 90 days horizon Weitz Balanced is expected to under-perform the Core Plus. In addition to that, Weitz Balanced is 1.87 times more volatile than Core Plus Income. It trades about -0.15 of its total potential returns per unit of risk. Core Plus Income is currently generating about -0.12 per unit of volatility. If you would invest  966.00  in Core Plus Income on October 6, 2024 and sell it today you would lose (14.00) from holding Core Plus Income or give up 1.45% of portfolio value over 90 days.

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

Weitz Balanced  vs.  Core Plus Income

Weitz Balanced

Risk-Adjusted Performance

0 of 100

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.

Core Plus Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Core Plus Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental drivers, Core Plus 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 Core Plus

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

The idea behind Weitz Balanced and Core Plus Income 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.