Correlation Between Longleaf Partners and Sound Shore

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

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

Diversification Opportunities for Longleaf Partners and Sound Shore

0.86

Correlation Coefficient

Longleaf Partners  Sound Shore

Very poor diversification

The 3 months correlation between Longleaf and Sound is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Longleaf Partners Fund and Sound Shore Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Shore Fund and Longleaf Partners 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 Longleaf Partners Fund are associated (or correlated) with Sound Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Shore Fund has no effect on the direction of Longleaf Partners i.e., Longleaf Partners and Sound Shore go up and down completely randomly.

Pair Corralation between Longleaf Partners and Sound Shore

Assuming the 90 days horizon Longleaf Partners is expected to generate 1.89 times less return on investment than Sound Shore. In addition to that, Longleaf Partners is 1.34 times more volatile than Sound Shore Fund. It trades about 0.08 of its total potential returns per unit of risk. Sound Shore Fund is currently generating about 0.19 per unit of volatility. If you would invest  3,697  in Sound Shore Fund on May 28, 2025 and sell it today you would earn a total of  327.00  from holding Sound Shore Fund or generate 8.85% return on investment over 90 days.

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

Longleaf Partners Fund  vs.  Sound Shore Fund

Longleaf Partners

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Longleaf Partners Fund are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Longleaf Partners is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sound Shore Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sound Shore Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Sound Shore may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Longleaf Partners and Sound Shore

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

The idea behind Longleaf Partners Fund and Sound Shore Fund 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.