Correlation Between Hodges Blue and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Hodges Blue 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 Hodges Blue and Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hodges Blue Chip and Hodges Small Cap, you can compare the effects of market volatilities on Hodges Blue 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 Hodges Blue with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hodges Blue and Hodges Small.
Diversification Opportunities for Hodges Blue and Hodges Small
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hodges and Hodges is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Blue Chip 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 Hodges Blue 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 Hodges Blue Chip 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 Hodges Blue i.e., Hodges Blue and Hodges Small go up and down completely randomly.
Pair Corralation between Hodges Blue and Hodges Small
Assuming the 90 days horizon Hodges Blue is expected to generate 1.1 times less return on investment than Hodges Small. But when comparing it to its historical volatility, Hodges Blue Chip is 1.5 times less risky than Hodges Small. It trades about 0.17 of its potential returns per unit of risk. Hodges Small Cap is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,927 in Hodges Small Cap on August 28, 2024 and sell it today you would earn a total of 710.00 from holding Hodges Small Cap or generate 36.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.52% |
| Values | Daily Returns |
Hodges Blue Chip vs. Hodges Small Cap
Performance |
| Timeline |
| Hodges Blue Chip |
| Hodges Small Cap |
Hodges Blue and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hodges Blue and Hodges Small
The main advantage of trading using opposite Hodges Blue and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hodges Blue 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.| Hodges Blue vs. Hodges Small Cap | Hodges Blue vs. Hodges Fund Retail | Hodges Blue vs. Hodges Small Intrinsic | Hodges Blue vs. Brown Advisory Flexible |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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