Correlation Between American Funds and Hodges Small
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Hodges Small Intrinsic, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Hodges Small.
Diversification Opportunities for American Funds and Hodges Small
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Hodges is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental 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 American Funds 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 American Funds Fundamental 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 American Funds i.e., American Funds and Hodges Small go up and down completely randomly.
Pair Corralation between American Funds and Hodges Small
Assuming the 90 days horizon American Funds Fundamental is expected to generate 0.65 times more return on investment than Hodges Small. However, American Funds Fundamental is 1.54 times less risky than Hodges Small. It trades about 0.12 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 6,210 in American Funds Fundamental on August 31, 2024 and sell it today you would earn a total of 2,511 from holding American Funds Fundamental or generate 40.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.73% |
| Values | Daily Returns |
American Funds Fundamental vs. Hodges Small Intrinsic
Performance |
| Timeline |
| American Funds Funda |
| Hodges Small Intrinsic |
American Funds and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Hodges Small
The main advantage of trading using opposite American Funds and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. Federated Institutional High | American Funds vs. Siit High Yield | American Funds vs. Gmo High Yield | American Funds vs. Dunham High Yield |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |