Correlation Between Hunter Small and M Large
Can any of the company-specific risk be diversified away by investing in both Hunter Small and M Large 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 M Large 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 M Large Cap, you can compare the effects of market volatilities on Hunter Small and M Large 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 M Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunter Small and M Large.
Diversification Opportunities for Hunter Small and M Large
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hunter and MTCGX is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Hunter Small Cap and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Hunter Small i.e., Hunter Small and M Large go up and down completely randomly.
Pair Corralation between Hunter Small and M Large
Assuming the 90 days horizon Hunter Small Cap is expected to generate 0.37 times more return on investment than M Large. However, Hunter Small Cap is 2.71 times less risky than M Large. It trades about -0.38 of its potential returns per unit of risk. M Large Cap is currently generating about -0.18 per unit of risk. If you would invest 1,331 in Hunter Small Cap on October 11, 2024 and sell it today you would lose (95.00) from holding Hunter Small Cap or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hunter Small Cap vs. M Large Cap
Performance |
| Timeline |
| Hunter Small Cap |
| M Large Cap |
Hunter Small and M Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hunter Small and M Large
The main advantage of trading using opposite Hunter Small and M Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hunter Small position performs unexpectedly, M Large 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 M Large will offset losses from the drop in M Large's long position.| Hunter Small vs. Artisan High Income | Hunter Small vs. Buffalo High Yield | Hunter Small vs. Siit High Yield | Hunter Small vs. T Rowe Price |
| M Large vs. Hunter Small Cap | M Large vs. Vy Columbia Small | M Large vs. Champlain Small | M Large vs. Praxis Small Cap |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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