Correlation Between Value Fund and Weitz Balanced

Can any of the company-specific risk be diversified away by investing in both Value 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 Value 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 Value Fund Value and Weitz Balanced, you can compare the effects of market volatilities on Value 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 Value Fund with a short position of Weitz Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Fund and Weitz Balanced.

Diversification Opportunities for Value Fund and Weitz Balanced

0.96

Correlation Coefficient

Value Fund  Weitz Balanced

Almost no diversification

The 3 months correlation between Value and Weitz is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Value and Weitz Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weitz Balanced 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 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 Value Fund i.e., Value Fund and Weitz Balanced go up and down completely randomly.

Pair Corralation between Value Fund and Weitz Balanced

Assuming the 90 days horizon Value Fund Value is expected to under-perform the Weitz Balanced. In addition to that, Value Fund is 2.92 times more volatile than Weitz Balanced. It trades about -0.17 of its total potential returns per unit of risk. Weitz Balanced is currently generating about -0.15 per unit of volatility. If you would invest  1,778  in Weitz Balanced on December 1, 2024 and sell it today you would lose (75.00) from holding Weitz Balanced or give up 4.22% of portfolio value over 90 days.

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

Value Fund Value  vs.  Weitz Balanced

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 weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund 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 current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Value Fund and Weitz Balanced

The main advantage of trading using opposite Value Fund and Weitz Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value 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 Value Fund Value 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.