Correlation Between Hodges Small and Small-cap Value
Can any of the company-specific risk be diversified away by investing in both Hodges Small and Small-cap Value 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 Small-cap Value 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 Small Cap Value Profund, you can compare the effects of market volatilities on Hodges Small and Small-cap Value 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 Small-cap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hodges Small and Small-cap Value.
Diversification Opportunities for Hodges Small and Small-cap Value
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hodges and Small-cap is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Small Cap and Small Cap Value Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Small-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Hodges Small i.e., Hodges Small and Small-cap Value go up and down completely randomly.
Pair Corralation between Hodges Small and Small-cap Value
Assuming the 90 days horizon Hodges Small Cap is expected to generate 0.91 times more return on investment than Small-cap Value. However, Hodges Small Cap is 1.1 times less risky than Small-cap Value. It trades about 0.31 of its potential returns per unit of risk. Small Cap Value Profund is currently generating about 0.26 per unit of risk. If you would invest 2,391 in Hodges Small Cap on August 28, 2024 and sell it today you would earn a total of 246.00 from holding Hodges Small Cap or generate 10.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hodges Small Cap vs. Small Cap Value Profund
Performance |
| Timeline |
| Hodges Small Cap |
| Small Cap Value |
Hodges Small and Small-cap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hodges Small and Small-cap Value
The main advantage of trading using opposite Hodges Small and Small-cap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hodges Small position performs unexpectedly, Small-cap Value 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 Small-cap Value will offset losses from the drop in Small-cap Value'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 |
| Small-cap Value vs. Evaluator Conservative Rms | Small-cap Value vs. American Funds Conservative | Small-cap Value vs. Pgim Conservative Retirement | Small-cap Value vs. Fidelity Advisor Diversified |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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