Correlation Between Hodges Small and Walthausen Small
Can any of the company-specific risk be diversified away by investing in both Hodges Small and Walthausen 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 Small and Walthausen Small 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 Walthausen Small Cap, you can compare the effects of market volatilities on Hodges Small and Walthausen 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 Small with a short position of Walthausen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hodges Small and Walthausen Small.
Diversification Opportunities for Hodges Small and Walthausen Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hodges and Walthausen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Small Cap and Walthausen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walthausen Small Cap 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 Walthausen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walthausen Small Cap has no effect on the direction of Hodges Small i.e., Hodges Small and Walthausen Small go up and down completely randomly.
Pair Corralation between Hodges Small and Walthausen Small
Assuming the 90 days horizon Hodges Small is expected to generate 1.12 times less return on investment than Walthausen Small. In addition to that, Hodges Small is 1.07 times more volatile than Walthausen Small Cap. It trades about 0.33 of its total potential returns per unit of risk. Walthausen Small Cap is currently generating about 0.4 per unit of volatility. If you would invest 1,542 in Walthausen Small Cap on September 1, 2024 and sell it today you would earn a total of 204.00 from holding Walthausen Small Cap or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hodges Small Cap vs. Walthausen Small Cap
Performance |
| Timeline |
| Hodges Small Cap |
| Walthausen Small Cap |
Hodges Small and Walthausen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hodges Small and Walthausen Small
The main advantage of trading using opposite Hodges Small and Walthausen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hodges Small position performs unexpectedly, Walthausen 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 Walthausen Small will offset losses from the drop in Walthausen Small'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 |
| Walthausen Small vs. Amg Southernsun Small | Walthausen Small vs. Wasatch Emerging Markets | Walthausen Small vs. Hodges Small Cap | Walthausen Small vs. Intrepid Endurance 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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