Correlation Between Small-cap Value and Huber Capital
Can any of the company-specific risk be diversified away by investing in both Small-cap Value and Huber Capital 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 Small-cap Value and Huber Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Fund and Huber Capital Equity, you can compare the effects of market volatilities on Small-cap Value and Huber Capital 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 Small-cap Value with a short position of Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Huber Capital.
Diversification Opportunities for Small-cap Value and Huber Capital
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Small-cap and Huber is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Fund and Huber Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Equity and Small-cap Value 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 Small Cap Value Fund are associated (or correlated) with Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Equity has no effect on the direction of Small-cap Value i.e., Small-cap Value and Huber Capital go up and down completely randomly.
Pair Corralation between Small-cap Value and Huber Capital
Assuming the 90 days horizon Small Cap Value Fund is expected to under-perform the Huber Capital. In addition to that, Small-cap Value is 1.96 times more volatile than Huber Capital Equity. It trades about -0.4 of its total potential returns per unit of risk. Huber Capital Equity is currently generating about -0.23 per unit of volatility. If you would invest 3,432 in Huber Capital Equity on October 9, 2024 and sell it today you would lose (134.00) from holding Huber Capital Equity or give up 3.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value Fund vs. Huber Capital Equity
Performance |
| Timeline |
| Small Cap Value |
| Huber Capital Equity |
Small-cap Value and Huber Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and Huber Capital
The main advantage of trading using opposite Small-cap Value and Huber Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value position performs unexpectedly, Huber Capital 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 Huber Capital will offset losses from the drop in Huber Capital's long position.| Small-cap Value vs. Aggressive Investors 1 | Small-cap Value vs. Ultra Small Pany Market | Small-cap Value vs. Ultra Small Pany Fund | Small-cap Value vs. Omni Small Cap Value |
| Huber Capital vs. Huber Capital Equity | Huber Capital vs. Huber Capital Small | Huber Capital vs. Huber Capital Small | Huber Capital vs. Amg Gwk Small |
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.
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