Correlation Between Value Fund and Weitz Ultra

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

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

Diversification Opportunities for Value Fund and Weitz Ultra

-0.41

Correlation Coefficient

Value Fund  Weitz Ultra

Very good diversification

The 3 months correlation between Value and Weitz is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Value and Weitz Ultra Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weitz Ultra Short and Value 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 Value Fund Value are associated (or correlated) with Weitz Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weitz Ultra Short has no effect on the direction of Value Fund i.e., Value Fund and Weitz Ultra go up and down completely randomly.

Pair Corralation between Value Fund and Weitz Ultra

Assuming the 90 days horizon Value Fund Value is expected to under-perform the Weitz Ultra. In addition to that, Value Fund is 12.71 times more volatile than Weitz Ultra Short. It trades about -0.07 of its total potential returns per unit of risk. Weitz Ultra Short is currently generating about 0.23 per unit of volatility. If you would invest  989.00  in Weitz Ultra Short on December 28, 2024 and sell it today you would earn a total of  10.00  from holding Weitz Ultra Short or generate 1.01% return on investment over 90 days.

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

Value Fund Value  vs.  Weitz Ultra Short

Value Fund Value

Risk-Adjusted Performance

Very Weak

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

Weitz Ultra Short

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Weitz Ultra Short are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Weitz Ultra is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Value Fund and Weitz Ultra

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

The idea behind Value Fund Value and Weitz Ultra Short 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.