Correlation Between Intrepid Capital and Strategic Allocation

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

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

Diversification Opportunities for Intrepid Capital and Strategic Allocation

0.81

Correlation Coefficient

Intrepid Capital  Strategic Allocation

Very poor diversification

The 3 months correlation between Intrepid and Strategic is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Capital Fund and Strategic Allocation Servative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Allocation and Intrepid Capital 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 Intrepid Capital Fund are associated (or correlated) with Strategic Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Allocation has no effect on the direction of Intrepid Capital i.e., Intrepid Capital and Strategic Allocation go up and down completely randomly.

Pair Corralation between Intrepid Capital and Strategic Allocation

Assuming the 90 days horizon Intrepid Capital Fund is expected to generate 1.75 times more return on investment than Strategic Allocation. However, Intrepid Capital is 1.75 times more volatile than Strategic Allocation Servative. It trades about 0.27 of its potential returns per unit of risk. Strategic Allocation Servative is currently generating about 0.11 per unit of risk. If you would invest  1,200  in Intrepid Capital Fund on September 13, 2024 and sell it today you would earn a total of  118.00  from holding Intrepid Capital Fund or generate 9.83% return on investment over 90 days.

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

Intrepid Capital Fund  vs.  Strategic Allocation Servative

Intrepid Capital

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Capital Fund are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Intrepid Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Strategic Allocation

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Strategic Allocation Servative are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Strategic Allocation is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Intrepid Capital and Strategic Allocation

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

The idea behind Intrepid Capital Fund and Strategic Allocation Servative 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.