Correlation Between Global Franchise and Huber Capital
Can any of the company-specific risk be diversified away by investing in both Global Franchise and Huber Capital 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 Global Franchise and Huber Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Franchise Portfolio and Huber Capital Diversified, you can compare the effects of market volatilities on Global Franchise and Huber Capital 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 Global Franchise with a short position of Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Franchise and Huber Capital.
Diversification Opportunities for Global Franchise and Huber Capital
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Huber is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Global Franchise Portfolio and Huber Capital Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Diversified and Global Franchise 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 Global Franchise Portfolio are associated (or correlated) with Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Diversified has no effect on the direction of Global Franchise i.e., Global Franchise and Huber Capital go up and down completely randomly.
Pair Corralation between Global Franchise and Huber Capital
Assuming the 90 days horizon Global Franchise Portfolio is expected to generate 0.7 times more return on investment than Huber Capital. However, Global Franchise Portfolio is 1.43 times less risky than Huber Capital. It trades about -0.06 of its potential returns per unit of risk. Huber Capital Diversified is currently generating about -0.1 per unit of risk. If you would invest 3,413 in Global Franchise Portfolio on January 11, 2025 and sell it today you would lose (101.00) from holding Global Franchise Portfolio or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Global Franchise Portfolio vs. Huber Capital Diversified
Performance |
| Timeline |
| Global Franchise Por |
| Huber Capital Diversified |
Global Franchise and Huber Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Franchise and Huber Capital
The main advantage of trading using opposite Global Franchise and Huber Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Franchise position performs unexpectedly, Huber Capital 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 Huber Capital will offset losses from the drop in Huber Capital's long position.| Global Franchise vs. Emerging Markets Equity | Global Franchise vs. Global Fixed Income | Global Franchise vs. Global Fixed Income | Global Franchise vs. Global Fixed Income |
| Huber Capital vs. Huber Capital Diversified | Huber Capital vs. Huber Capital Equity | Huber Capital vs. Huber Capital Equity | Huber Capital vs. Huber Capital Mid |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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