Correlation Between Target Managed and Tweedy Browne

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

By analyzing existing cross correlation between Target Managed Allocation and Tweedy Browne Global, you can compare the effects of market volatilities on Target Managed and Tweedy Browne 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 Target Managed with a short position of Tweedy Browne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Target Managed and Tweedy Browne.

Diversification Opportunities for Target Managed and Tweedy Browne

0.28

Correlation Coefficient

Target Managed  Tweedy Browne

Modest diversification

The 3 months correlation between Target and Tweedy is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Target Managed Allocation and Tweedy Browne Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tweedy Browne Global and Target Managed 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 Target Managed Allocation are associated (or correlated) with Tweedy Browne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tweedy Browne Global has no effect on the direction of Target Managed i.e., Target Managed and Tweedy Browne go up and down completely randomly.

Pair Corralation between Target Managed and Tweedy Browne

Assuming the 90 days horizon Target Managed Allocation is expected to generate 0.78 times more return on investment than Tweedy Browne. However, Target Managed Allocation is 1.28 times less risky than Tweedy Browne. It trades about 0.11 of its potential returns per unit of risk. Tweedy Browne Global is currently generating about -0.08 per unit of risk. If you would invest  1,168  in Target Managed Allocation on September 12, 2025 and sell it today you would earn a total of  65.00  from holding Target Managed Allocation or generate 5.57% return on investment over 90 days.

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

Target Managed Allocation  vs.  Tweedy Browne Global

Target Managed Allocation

Risk-Adjusted Performance

Fair

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

Tweedy Browne Global

Risk-Adjusted Performance

Weak

Over the last 90 days Tweedy Browne Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Tweedy Browne is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Target Managed and Tweedy Browne

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

The idea behind Target Managed Allocation and Tweedy Browne Global 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.