Correlation Between Core Plus and Weitz Balanced

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

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

Diversification Opportunities for Core Plus and Weitz Balanced

-0.05

Correlation Coefficient

Core Plus  Weitz Balanced

Good diversification

The 3 months correlation between Core and Weitz is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Core Plus Income and Weitz Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weitz Balanced and Core Plus 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 Core Plus Income 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 Core Plus i.e., Core Plus and Weitz Balanced go up and down completely randomly.

Pair Corralation between Core Plus and Weitz Balanced

Assuming the 90 days horizon Core Plus Income is expected to generate 0.84 times more return on investment than Weitz Balanced. However, Core Plus Income is 1.19 times less risky than Weitz Balanced. It trades about 0.12 of its potential returns per unit of risk. Weitz Balanced is currently generating about 0.0 per unit of risk. If you would invest  943.00  in Core Plus Income on December 28, 2024 and sell it today you would earn a total of  20.00  from holding Core Plus Income or generate 2.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Core Plus Income  vs.  Weitz Balanced

Core Plus Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Core Plus Income are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Core Plus 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

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 recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Core Plus and Weitz Balanced

The main advantage of trading using opposite Core Plus and Weitz Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Core Plus 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 Core Plus Income 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..