Correlation Between Huber Capital and Small Cap
Can any of the company-specific risk be diversified away by investing in both Huber Capital and Small Cap 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 Huber Capital and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huber Capital Equity and Small Cap Equity, you can compare the effects of market volatilities on Huber Capital and Small Cap 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 Huber Capital with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huber Capital and Small Cap.
Diversification Opportunities for Huber Capital and Small Cap
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between HUBER and Small is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Equity and Small Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Equity and Huber Capital 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 Huber Capital Equity are associated (or correlated) with Small Cap. 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 Equity has no effect on the direction of Huber Capital i.e., Huber Capital and Small Cap go up and down completely randomly.
Pair Corralation between Huber Capital and Small Cap
Assuming the 90 days horizon Huber Capital Equity is expected to generate 0.72 times more return on investment than Small Cap. However, Huber Capital Equity is 1.39 times less risky than Small Cap. It trades about 0.09 of its potential returns per unit of risk. Small Cap Equity is currently generating about 0.05 per unit of risk. If you would invest 2,400 in Huber Capital Equity on September 2, 2024 and sell it today you would earn a total of 1,056 from holding Huber Capital Equity or generate 44.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Huber Capital Equity vs. Small Cap Equity
Performance |
| Timeline |
| Huber Capital Equity |
| Small Cap Equity |
Huber Capital and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Huber Capital and Small Cap
The main advantage of trading using opposite Huber Capital and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huber Capital position performs unexpectedly, Small Cap 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 will offset losses from the drop in Small Cap's long position.| Huber Capital vs. Huber Capital Equity | Huber Capital vs. Huber Capital Small | Huber Capital vs. Huber Capital Small | Huber Capital vs. Amg Gwk Small |
| Small Cap vs. Growth Allocation Fund | Small Cap vs. Defensive Market Strategies | Small Cap vs. Defensive Market Strategies | Small Cap vs. Value Equity Institutional |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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