Correlation Between Hodges Small and Brown Advisory
Can any of the company-specific risk be diversified away by investing in both Hodges Small and Brown Advisory 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 Small and Brown Advisory into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hodges Small Cap and Brown Advisory Growth, you can compare the effects of market volatilities on Hodges Small and Brown Advisory 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 Small with a short position of Brown Advisory. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hodges Small and Brown Advisory.
Diversification Opportunities for Hodges Small and Brown Advisory
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hodges and Brown is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Small Cap and Brown Advisory Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brown Advisory Growth and Hodges Small 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 Small Cap are associated (or correlated) with Brown Advisory. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brown Advisory Growth has no effect on the direction of Hodges Small i.e., Hodges Small and Brown Advisory go up and down completely randomly.
Pair Corralation between Hodges Small and Brown Advisory
Assuming the 90 days horizon Hodges Small Cap is expected to generate 1.26 times more return on investment than Brown Advisory. However, Hodges Small is 1.26 times more volatile than Brown Advisory Growth. It trades about 0.07 of its potential returns per unit of risk. Brown Advisory Growth is currently generating about 0.08 per unit of risk. If you would invest 1,777 in Hodges Small Cap on August 31, 2024 and sell it today you would earn a total of 840.00 from holding Hodges Small Cap or generate 47.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Hodges Small Cap vs. Brown Advisory Growth
Performance |
| Timeline |
| Hodges Small Cap |
| Brown Advisory Growth |
Hodges Small and Brown Advisory Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hodges Small and Brown Advisory
The main advantage of trading using opposite Hodges Small and Brown Advisory positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hodges Small position performs unexpectedly, Brown Advisory 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 Brown Advisory will offset losses from the drop in Brown Advisory's long position.| Hodges Small vs. Hodges Fund Retail | Hodges Small vs. Amg Southernsun Small | Hodges Small vs. Brown Advisory Growth | Hodges Small vs. Eventide Gilead Fund |
| Brown Advisory vs. Europacific Growth Fund | Brown Advisory vs. Washington Mutual Investors | Brown Advisory vs. Capital World Growth | Brown Advisory vs. HUMANA INC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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