Correlation Between THE HILLMAN and FT Vest

Can any of the company-specific risk be diversified away by investing in both THE HILLMAN and FT Vest 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 THE HILLMAN and FT Vest into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between THE HILLMAN FUND and FT Vest Equity, you can compare the effects of market volatilities on THE HILLMAN and FT Vest 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 THE HILLMAN with a short position of FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of THE HILLMAN and FT Vest.

Diversification Opportunities for THE HILLMAN and FT Vest

0.03

Correlation Coefficient

THE HILLMAN  FT Vest

Significant diversification

The 3 months correlation between THE and DHDG is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding THE HILLMAN FUND and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity and THE HILLMAN 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 THE HILLMAN FUND are associated (or correlated) with FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of THE HILLMAN i.e., THE HILLMAN and FT Vest go up and down completely randomly.

Pair Corralation between THE HILLMAN and FT Vest

Assuming the 90 days horizon THE HILLMAN FUND is expected to under-perform the FT Vest. In addition to that, THE HILLMAN is 3.48 times more volatile than FT Vest Equity. It trades about -0.12 of its total potential returns per unit of risk. FT Vest Equity is currently generating about 0.0 per unit of volatility. If you would invest  3,106  in FT Vest Equity on November 30, 2024 and sell it today you would lose (5.00) from holding FT Vest Equity or give up 0.16% of portfolio value over 90 days.

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

THE HILLMAN FUND  vs.  FT Vest Equity

THE HILLMAN FUND

Risk-Adjusted Performance

Very Weak

Over the last 90 days THE HILLMAN FUND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

FT Vest Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Vest Equity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, FT Vest is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with THE HILLMAN and FT Vest

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

The idea behind THE HILLMAN FUND and FT Vest Equity 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.