Correlation Between Emerald Growth and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both Emerald Growth and Hotchkis Wiley 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 Emerald Growth and Hotchkis Wiley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerald Growth Fund and Hotchkis Wiley Large, you can compare the effects of market volatilities on Emerald Growth and Hotchkis Wiley 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 Emerald Growth with a short position of Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Growth and Hotchkis Wiley.
Diversification Opportunities for Emerald Growth and Hotchkis Wiley
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Emerald and Hotchkis is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Growth Fund and Hotchkis Wiley Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Large and Emerald Growth 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 Emerald Growth Fund are associated (or correlated) with Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Large has no effect on the direction of Emerald Growth i.e., Emerald Growth and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between Emerald Growth and Hotchkis Wiley
Assuming the 90 days horizon Emerald Growth is expected to generate 1.19 times less return on investment than Hotchkis Wiley. In addition to that, Emerald Growth is 1.16 times more volatile than Hotchkis Wiley Large. It trades about 0.06 of its total potential returns per unit of risk. Hotchkis Wiley Large is currently generating about 0.08 per unit of volatility. If you would invest 3,405 in Hotchkis Wiley Large on August 26, 2024 and sell it today you would earn a total of 1,437 from holding Hotchkis Wiley Large or generate 42.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerald Growth Fund vs. Hotchkis Wiley Large
Performance |
| Timeline |
| Emerald Growth |
| Hotchkis Wiley Large |
Emerald Growth and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerald Growth and Hotchkis Wiley
The main advantage of trading using opposite Emerald Growth and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Growth position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley's long position.| Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Driehaus Micro Cap | Emerald Growth vs. Eventide Gilead Fund |
| Hotchkis Wiley vs. Hw Opportunities Mp | Hotchkis Wiley vs. Hotchkis Wiley Value | Hotchkis Wiley vs. Hotchkis Wiley Value | Hotchkis Wiley vs. Hotchkis Wiley Value |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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