Correlation Between Balanced Fund and Weitz Balanced

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

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

Diversification Opportunities for Balanced Fund and Weitz Balanced

0.89

Correlation Coefficient

Balanced Fund  Weitz Balanced

Very poor diversification

The 3 months correlation between Balanced and Weitz is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Balanced and Weitz Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weitz Balanced and Balanced Fund 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 Balanced Fund Balanced are associated (or correlated) with Weitz Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weitz Balanced has no effect on the direction of Balanced Fund i.e., Balanced Fund and Weitz Balanced go up and down completely randomly.

Pair Corralation between Balanced Fund and Weitz Balanced

Assuming the 90 days horizon Balanced Fund is expected to generate 1.07 times less return on investment than Weitz Balanced. In addition to that, Balanced Fund is 1.0 times more volatile than Weitz Balanced. It trades about 0.12 of its total potential returns per unit of risk. Weitz Balanced is currently generating about 0.12 per unit of volatility. If you would invest  1,753  in Weitz Balanced on September 1, 2024 and sell it today you would earn a total of  46.00  from holding Weitz Balanced or generate 2.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Balanced Fund Balanced  vs.  Weitz Balanced

Balanced Fund Balanced

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Balanced are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. 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.

Weitz Balanced

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weitz Balanced are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Balanced Fund and Weitz Balanced

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

The idea behind Balanced Fund Balanced and Weitz 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.