Correlation Between Third Avenue and Anchor Tactical

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

By analyzing existing cross correlation between Third Avenue Small Cap and Anchor Tactical Equity, you can compare the effects of market volatilities on Third Avenue and Anchor Tactical 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 Third Avenue with a short position of Anchor Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Third Avenue and Anchor Tactical.

Diversification Opportunities for Third Avenue and Anchor Tactical

-0.25

Correlation Coefficient

Third Avenue  Anchor Tactical

Very good diversification

The 3 months correlation between Third and Anchor is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Third Avenue Small Cap and Anchor Tactical Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anchor Tactical Equity and Third Avenue 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 Third Avenue Small Cap are associated (or correlated) with Anchor Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anchor Tactical Equity has no effect on the direction of Third Avenue i.e., Third Avenue and Anchor Tactical go up and down completely randomly.

Pair Corralation between Third Avenue and Anchor Tactical

Assuming the 90 days horizon Third Avenue is expected to generate 2.19 times less return on investment than Anchor Tactical. In addition to that, Third Avenue is 1.22 times more volatile than Anchor Tactical Equity. It trades about 0.01 of its total potential returns per unit of risk. Anchor Tactical Equity is currently generating about 0.03 per unit of volatility. If you would invest  1,533  in Anchor Tactical Equity on August 26, 2025 and sell it today you would earn a total of  20.00  from holding Anchor Tactical Equity or generate 1.3% return on investment over 90 days.

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

Third Avenue Small Cap  vs.  Anchor Tactical Equity

Third Avenue Small

Risk-Adjusted Performance

Weakest

Over the last 90 days Third Avenue Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Third Avenue is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Anchor Tactical Equity

Risk-Adjusted Performance

Weak

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

Pair Trading with Third Avenue and Anchor Tactical

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

The idea behind Third Avenue Small Cap and Anchor Tactical Equity 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.