Correlation Between Weitz Ultra and Weitz Balanced

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

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

Diversification Opportunities for Weitz Ultra and Weitz Balanced

0.61

Correlation Coefficient

Weitz Ultra  Weitz Balanced

Poor diversification

The 3 months correlation between Weitz and Weitz is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Weitz Ultra Short and Weitz Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weitz Balanced and Weitz Ultra 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 Weitz Ultra Short 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 Weitz Ultra i.e., Weitz Ultra and Weitz Balanced go up and down completely randomly.

Pair Corralation between Weitz Ultra and Weitz Balanced

Assuming the 90 days horizon Weitz Ultra Short is expected to under-perform the Weitz Balanced. But the mutual fund apears to be less risky and, when comparing its historical volatility, Weitz Ultra Short is 9.49 times less risky than Weitz Balanced. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Weitz Balanced is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,767  in Weitz Balanced on September 5, 2024 and sell it today you would earn a total of  26.00  from holding Weitz Balanced or generate 1.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Weitz Ultra Short  vs.  Weitz Balanced

Weitz Ultra Short

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Weitz Ultra Short are ranked lower than 11 (%) 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.

Weitz Balanced

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Weitz Balanced are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. 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 Weitz Ultra and Weitz Balanced

The main advantage of trading using opposite Weitz Ultra and Weitz Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weitz Ultra 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 Weitz Ultra Short 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.