Correlation Between Buffalo Emerging and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Buffalo Emerging and Hodges Small 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 Buffalo Emerging and Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buffalo Emerging Opportunities and Hodges Small Cap, you can compare the effects of market volatilities on Buffalo Emerging and Hodges Small 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 Buffalo Emerging with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo Emerging and Hodges Small.
Diversification Opportunities for Buffalo Emerging and Hodges Small
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Buffalo and Hodges is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo Emerging Opportunities and Hodges Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Cap and Buffalo Emerging 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 Buffalo Emerging Opportunities are associated (or correlated) with Hodges Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Small Cap has no effect on the direction of Buffalo Emerging i.e., Buffalo Emerging and Hodges Small go up and down completely randomly.
Pair Corralation between Buffalo Emerging and Hodges Small
Assuming the 90 days horizon Buffalo Emerging is expected to generate 2.21 times less return on investment than Hodges Small. In addition to that, Buffalo Emerging is 1.01 times more volatile than Hodges Small Cap. It trades about 0.14 of its total potential returns per unit of risk. Hodges Small Cap is currently generating about 0.31 per unit of volatility. If you would invest 2,363 in Hodges Small Cap on August 26, 2024 and sell it today you would earn a total of 252.00 from holding Hodges Small Cap or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buffalo Emerging Opportunities vs. Hodges Small Cap
Performance |
| Timeline |
| Buffalo Emerging Opp |
| Hodges Small Cap |
Buffalo Emerging and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buffalo Emerging and Hodges Small
The main advantage of trading using opposite Buffalo Emerging and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo Emerging position performs unexpectedly, Hodges Small 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 Hodges Small will offset losses from the drop in Hodges Small's long position.| Buffalo Emerging vs. Buffalo Mid Cap | Buffalo Emerging vs. Buffalo Small Cap | Buffalo Emerging vs. Buffalo Large Cap | Buffalo Emerging vs. Buffalo Discovery Fund |
| Hodges Small vs. Hodges Fund Retail | Hodges Small vs. Amg Southernsun Small | Hodges Small vs. Brown Advisory Growth | Hodges Small vs. Eventide Gilead Fund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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