Correlation Between Dow 2x and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both Dow 2x and Hotchkis Wiley 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 Dow 2x and Hotchkis Wiley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow 2x Strategy and Hotchkis Wiley Small, you can compare the effects of market volatilities on Dow 2x and Hotchkis Wiley 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 Dow 2x with a short position of Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow 2x and Hotchkis Wiley.
Diversification Opportunities for Dow 2x and Hotchkis Wiley
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dow and Hotchkis is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dow 2x Strategy and Hotchkis Wiley Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Small and Dow 2x 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 Dow 2x Strategy are associated (or correlated) with Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Small has no effect on the direction of Dow 2x i.e., Dow 2x and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between Dow 2x and Hotchkis Wiley
Assuming the 90 days horizon Dow 2x Strategy is expected to generate 1.22 times more return on investment than Hotchkis Wiley. However, Dow 2x is 1.22 times more volatile than Hotchkis Wiley Small. It trades about 0.11 of its potential returns per unit of risk. Hotchkis Wiley Small is currently generating about 0.06 per unit of risk. If you would invest 11,194 in Dow 2x Strategy on August 29, 2024 and sell it today you would earn a total of 4,945 from holding Dow 2x Strategy or generate 44.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow 2x Strategy vs. Hotchkis Wiley Small
Performance |
| Timeline |
| Dow 2x Strategy |
| Hotchkis Wiley Small |
Dow 2x and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dow 2x and Hotchkis Wiley
The main advantage of trading using opposite Dow 2x and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow 2x position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley's long position.| Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Dow 2x Strategy | Dow 2x vs. Nasdaq 100 2x Strategy | Dow 2x vs. Ultramid Cap Profund Ultramid Cap |
| Hotchkis Wiley vs. Hotchkis And Wiley | Hotchkis Wiley vs. Hotchkis Wiley Small | Hotchkis Wiley vs. Dow 2x Strategy | Hotchkis Wiley vs. Rmb Mendon Financial |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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