Correlation Between Short Duration and Hood River

Can any of the company-specific risk be diversified away by investing in both Short Duration and Hood River 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 Short Duration and Hood River into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Short Duration Inflation and Hood River International, you can compare the effects of market volatilities on Short Duration and Hood River 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 Short Duration with a short position of Hood River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Short Duration and Hood River.

Diversification Opportunities for Short Duration and Hood River

-0.07

Correlation Coefficient

Short Duration  Hood River

Good diversification

The 3 months correlation between Short and Hood is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Short Duration Inflation and Hood River International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hood River International and Short Duration 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 Short Duration Inflation are associated (or correlated) with Hood River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hood River International has no effect on the direction of Short Duration i.e., Short Duration and Hood River go up and down completely randomly.

Pair Corralation between Short Duration and Hood River

Assuming the 90 days horizon Short Duration Inflation is expected to under-perform the Hood River. But the mutual fund apears to be less risky and, when comparing its historical volatility, Short Duration Inflation is 4.85 times less risky than Hood River. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Hood River International is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,184  in Hood River International on October 10, 2024 and sell it today you would earn a total of  13.00  from holding Hood River International or generate 1.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.2%
Values	Daily Returns

Short Duration Inflation  vs.  Hood River International

Short Duration Inflation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Short Duration Inflation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Short Duration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hood River International

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hood River International are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Hood River is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Short Duration and Hood River

The main advantage of trading using opposite Short Duration and Hood River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Short Duration position performs unexpectedly, Hood River 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 Hood River will offset losses from the drop in Hood River's long position.

The idea behind Short Duration Inflation and Hood River International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.