Correlation Between Smallcap Value and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Smallcap Value 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 Smallcap Value and Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Value Fund and Hodges Small Intrinsic, you can compare the effects of market volatilities on Smallcap Value 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 Smallcap Value with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Value and Hodges Small.
Diversification Opportunities for Smallcap Value and Hodges Small
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Smallcap and Hodges is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Value Fund 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 Smallcap Value 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 Smallcap Value Fund 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 Smallcap Value i.e., Smallcap Value and Hodges Small go up and down completely randomly.
Pair Corralation between Smallcap Value and Hodges Small
Assuming the 90 days horizon Smallcap Value Fund is expected to generate 0.97 times more return on investment than Hodges Small. However, Smallcap Value Fund is 1.03 times less risky than Hodges Small. It trades about 0.05 of its potential returns per unit of risk. Hodges Small Intrinsic is currently generating about 0.05 per unit of risk. If you would invest 1,064 in Smallcap Value Fund on August 31, 2024 and sell it today you would earn a total of 252.00 from holding Smallcap Value Fund or generate 23.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Smallcap Value Fund vs. Hodges Small Intrinsic
Performance |
| Timeline |
| Smallcap Value |
| Hodges Small Intrinsic |
Smallcap Value and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smallcap Value and Hodges Small
The main advantage of trading using opposite Smallcap Value and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Value 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.| Smallcap Value vs. Vy Goldman Sachs | Smallcap Value vs. Global Gold Fund | Smallcap Value vs. Great West Goldman Sachs | Smallcap Value vs. Precious Metals And |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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