Correlation Between Hunter Small and Rational Defensive
Can any of the company-specific risk be diversified away by investing in both Hunter Small and Rational Defensive 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 Hunter Small and Rational Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hunter Small Cap and Rational Defensive Growth, you can compare the effects of market volatilities on Hunter Small and Rational Defensive 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 Hunter Small with a short position of Rational Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunter Small and Rational Defensive.
Diversification Opportunities for Hunter Small and Rational Defensive
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hunter and Rational is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Hunter Small Cap and Rational Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Defensive Growth and Hunter 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 Hunter Small Cap are associated (or correlated) with Rational Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Defensive Growth has no effect on the direction of Hunter Small i.e., Hunter Small and Rational Defensive go up and down completely randomly.
Pair Corralation between Hunter Small and Rational Defensive
Assuming the 90 days horizon Hunter Small Cap is expected to generate 0.91 times more return on investment than Rational Defensive. However, Hunter Small Cap is 1.1 times less risky than Rational Defensive. It trades about 0.15 of its potential returns per unit of risk. Rational Defensive Growth is currently generating about 0.01 per unit of risk. If you would invest 1,245 in Hunter Small Cap on October 23, 2024 and sell it today you would earn a total of 27.00 from holding Hunter Small Cap or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hunter Small Cap vs. Rational Defensive Growth
Performance |
| Timeline |
| Hunter Small Cap |
| Rational Defensive Growth |
Hunter Small and Rational Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hunter Small and Rational Defensive
The main advantage of trading using opposite Hunter Small and Rational Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hunter Small position performs unexpectedly, Rational Defensive 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 Rational Defensive will offset losses from the drop in Rational Defensive's long position.| Hunter Small vs. Pace Smallmedium Value | Hunter Small vs. Touchstone Small Cap | Hunter Small vs. Small Pany Growth | Hunter Small vs. Aqr Small Cap |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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