Correlation Between Sierra E and Osterweis Fund

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

By analyzing existing cross correlation between Sierra E Retirement and Osterweis Fund Investor, you can compare the effects of market volatilities on Sierra E and Osterweis 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 Sierra E with a short position of Osterweis Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sierra E and Osterweis Fund.

Diversification Opportunities for Sierra E and Osterweis Fund

0.62

Correlation Coefficient

Sierra E  Osterweis Fund

Poor diversification

The 3 months correlation between Sierra and Osterweis is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sierra E Retirement and Osterweis Fund Investor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Osterweis Fund Investor and Sierra E 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 Sierra E Retirement are associated (or correlated) with Osterweis Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Osterweis Fund Investor has no effect on the direction of Sierra E i.e., Sierra E and Osterweis Fund go up and down completely randomly.

Pair Corralation between Sierra E and Osterweis Fund

Assuming the 90 days horizon Sierra E is expected to generate 9.88 times less return on investment than Osterweis Fund. But when comparing it to its historical volatility, Sierra E Retirement is 2.54 times less risky than Osterweis Fund. It trades about 0.03 of its potential returns per unit of risk. Osterweis Fund Investor is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,122  in Osterweis Fund Investor on September 13, 2024 and sell it today you would earn a total of  94.00  from holding Osterweis Fund Investor or generate 4.43% return on investment over 90 days.

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

Sierra E Retirement  vs.  Osterweis Fund Investor

Sierra E Retirement

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sierra E Retirement are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Sierra E is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Osterweis Fund Investor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Osterweis Fund Investor are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Osterweis 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 Sierra E and Osterweis Fund

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

The idea behind Sierra E Retirement and Osterweis Fund Investor 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.