Correlation Between Partners Value and Clipper Fund

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

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

Diversification Opportunities for Partners Value and Clipper Fund

0.82

Correlation Coefficient

Partners Value  Clipper Fund

Very poor diversification

The 3 months correlation between Partners and Clipper is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Partners Value Fund and Clipper Fund Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clipper Fund and Partners Value 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 Partners Value Fund are associated (or correlated) with Clipper Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clipper Fund has no effect on the direction of Partners Value i.e., Partners Value and Clipper Fund go up and down completely randomly.

Pair Corralation between Partners Value and Clipper Fund

Assuming the 90 days horizon Partners Value Fund is expected to generate 0.83 times more return on investment than Clipper Fund. However, Partners Value Fund is 1.2 times less risky than Clipper Fund. It trades about 0.04 of its potential returns per unit of risk. Clipper Fund Inc is currently generating about 0.02 per unit of risk. If you would invest  3,230  in Partners Value Fund on December 30, 2024 and sell it today you would earn a total of  66.00  from holding Partners Value Fund or generate 2.04% return on investment over 90 days.

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

Partners Value Fund  vs.  Clipper Fund Inc

Partners Value

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Partners Value Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Partners Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Clipper Fund

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Clipper Fund Inc are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Clipper 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 Partners Value and Clipper Fund

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

The idea behind Partners Value Fund and Clipper 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.