Correlation Between Hodges Small and Amg Southernsun
Can any of the company-specific risk be diversified away by investing in both Hodges Small and Amg Southernsun 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 Amg Southernsun 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 Amg Southernsun Small, you can compare the effects of market volatilities on Hodges Small and Amg Southernsun 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 Amg Southernsun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hodges Small and Amg Southernsun.
Diversification Opportunities for Hodges Small and Amg Southernsun
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hodges and Amg is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Small Cap and Amg Southernsun Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amg Southernsun Small 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 Amg Southernsun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amg Southernsun Small has no effect on the direction of Hodges Small i.e., Hodges Small and Amg Southernsun go up and down completely randomly.
Pair Corralation between Hodges Small and Amg Southernsun
Assuming the 90 days horizon Hodges Small Cap is expected to generate 1.16 times more return on investment than Amg Southernsun. However, Hodges Small is 1.16 times more volatile than Amg Southernsun Small. It trades about 0.26 of its potential returns per unit of risk. Amg Southernsun Small is currently generating about 0.21 per unit of risk. If you would invest 2,389 in Hodges Small Cap on August 30, 2024 and sell it today you would earn a total of 221.00 from holding Hodges Small Cap or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hodges Small Cap vs. Amg Southernsun Small
Performance |
| Timeline |
| Hodges Small Cap |
| Amg Southernsun Small |
Hodges Small and Amg Southernsun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hodges Small and Amg Southernsun
The main advantage of trading using opposite Hodges Small and Amg Southernsun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hodges Small position performs unexpectedly, Amg Southernsun 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 Amg Southernsun will offset losses from the drop in Amg Southernsun'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 |
| Amg Southernsun vs. Hodges Small Cap | Amg Southernsun vs. Walthausen Small Cap | Amg Southernsun vs. Matthew 25 Fund | Amg Southernsun vs. Amg Yacktman Focused |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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