Correlation Between Davenport Small and Huber Capital

Can any of the company-specific risk be diversified away by investing in both Davenport Small 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 Davenport Small and Huber Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Davenport Small Cap and Huber Capital Diversified, you can compare the effects of market volatilities on Davenport Small 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 Davenport Small with a short position of Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Davenport Small and Huber Capital.

Diversification Opportunities for Davenport Small and Huber Capital

0.92

Correlation Coefficient

Davenport Small  Huber Capital

Almost no diversification

The 3 months correlation between Davenport and Huber is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Davenport Small Cap 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 Davenport Small 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 Davenport Small Cap 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 Davenport Small i.e., Davenport Small and Huber Capital go up and down completely randomly.

Pair Corralation between Davenport Small and Huber Capital

Assuming the 90 days horizon Davenport Small is expected to generate 2.18 times less return on investment than Huber Capital. In addition to that, Davenport Small is 1.3 times more volatile than Huber Capital Diversified. It trades about 0.03 of its total potential returns per unit of risk. Huber Capital Diversified is currently generating about 0.1 per unit of volatility. If you would invest  1,922  in Huber Capital Diversified on September 12, 2024 and sell it today you would earn a total of  585.00  from holding Huber Capital Diversified or generate 30.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Davenport Small Cap  vs.  Huber Capital Diversified

Davenport Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Davenport Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Davenport Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Huber Capital Diversified

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Diversified are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Huber Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Davenport Small and Huber Capital

The main advantage of trading using opposite Davenport Small and Huber Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Davenport Small 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.

The idea behind Davenport Small Cap and Huber Capital Diversified 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.