Correlation Between Jacob Small and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Jacob Small and Hodges 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 Jacob Small and Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jacob Small Cap and Hodges Small Intrinsic, you can compare the effects of market volatilities on Jacob Small and Hodges 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 Jacob Small with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacob Small and Hodges Small.
Diversification Opportunities for Jacob Small and Hodges Small
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jacob and Hodges is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Jacob Small Cap and Hodges Small Intrinsic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Intrinsic and Jacob 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 Jacob Small Cap are associated (or correlated) with Hodges Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Small Intrinsic has no effect on the direction of Jacob Small i.e., Jacob Small and Hodges Small go up and down completely randomly.
Pair Corralation between Jacob Small and Hodges Small
Assuming the 90 days horizon Jacob Small Cap is expected to generate 1.31 times more return on investment than Hodges Small. However, Jacob Small is 1.31 times more volatile than Hodges Small Intrinsic. It trades about 0.29 of its potential returns per unit of risk. Hodges Small Intrinsic is currently generating about 0.22 per unit of risk. If you would invest 1,867 in Jacob Small Cap on August 31, 2024 and sell it today you would earn a total of 276.00 from holding Jacob Small Cap or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacob Small Cap vs. Hodges Small Intrinsic
Performance |
| Timeline |
| Jacob Small Cap |
| Hodges Small Intrinsic |
Jacob Small and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacob Small and Hodges Small
The main advantage of trading using opposite Jacob Small and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacob Small position performs unexpectedly, Hodges 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 Hodges Small will offset losses from the drop in Hodges Small's long position.| Jacob Small vs. Jacob Micro Cap | Jacob Small vs. Jacob Internet Fund | Jacob Small vs. Jacob Forward ETF | Jacob Small vs. Oberweis Small Cap Opportunities |
| Hodges Small vs. Hodges Small Cap | Hodges Small vs. Hodges Blue Chip | Hodges Small vs. Hodges Fund Retail | Hodges Small vs. Jacob 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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