Correlation Between Hodges Fund and Hodges Small

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

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

Diversification Opportunities for Hodges Fund and Hodges Small

0.98

Correlation Coefficient

Hodges Fund  Hodges Small

Almost no diversification

The 3 months correlation between Hodges and Hodges is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Fund Retail 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 Hodges Fund 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 Hodges Fund Retail 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 Hodges Fund i.e., Hodges Fund and Hodges Small go up and down completely randomly.

Pair Corralation between Hodges Fund and Hodges Small

Assuming the 90 days horizon Hodges Fund Retail is expected to generate 1.13 times more return on investment than Hodges Small. However, Hodges Fund is 1.13 times more volatile than Hodges Small Cap. It trades about 0.32 of its potential returns per unit of risk. Hodges Small Cap is currently generating about 0.23 per unit of risk. If you would invest  6,166  in Hodges Fund Retail on September 2, 2024 and sell it today you would earn a total of  1,836  from holding Hodges Fund Retail or generate 29.78% return on investment over 90 days.

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

Hodges Fund Retail  vs.  Hodges Small Cap

Hodges Fund Retail

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hodges Fund Retail are ranked lower than 25 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Hodges Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Hodges Small Cap

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hodges Small Cap are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hodges Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hodges Fund and Hodges Small

The main advantage of trading using opposite Hodges Fund and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hodges Fund 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 Hodges Fund Retail 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.