Correlation Between Amg Gwk and Hodges Small

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

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

Diversification Opportunities for Amg Gwk and Hodges Small

0.7

Correlation Coefficient

Amg Gwk  Hodges Small

Poor diversification

The 3 months correlation between Amg and Hodges is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Amg Gwk Small and Hodges Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Cap and Amg Gwk 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 Amg Gwk Small 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 Cap has no effect on the direction of Amg Gwk i.e., Amg Gwk and Hodges Small go up and down completely randomly.

Pair Corralation between Amg Gwk and Hodges Small

Assuming the 90 days horizon Amg Gwk Small is expected to generate 0.46 times more return on investment than Hodges Small. However, Amg Gwk Small is 2.19 times less risky than Hodges Small. It trades about -0.39 of its potential returns per unit of risk. Hodges Small Cap is currently generating about -0.36 per unit of risk. If you would invest  3,717  in Amg Gwk Small on September 29, 2024 and sell it today you would lose (375.00) from holding Amg Gwk Small or give up 10.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Amg Gwk Small  vs.  Hodges Small Cap

Amg Gwk Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hodges Small Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hodges Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Amg Gwk and Hodges Small

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

The idea behind Amg Gwk Small and Hodges Small Cap 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.