Correlation Between Hodges Small and Partners Iii

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

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

Diversification Opportunities for Hodges Small and Partners Iii

0.54

Correlation Coefficient

Hodges Small  Partners Iii

Very weak diversification

The 3 months correlation between Hodges and Partners is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Small Cap and Partners Iii Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Partners Iii Opportunity and Hodges 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 Hodges Small Cap are associated (or correlated) with Partners Iii. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Partners Iii Opportunity has no effect on the direction of Hodges Small i.e., Hodges Small and Partners Iii go up and down completely randomly.

Pair Corralation between Hodges Small and Partners Iii

Assuming the 90 days horizon Hodges Small Cap is expected to under-perform the Partners Iii. In addition to that, Hodges Small is 2.67 times more volatile than Partners Iii Opportunity. It trades about -0.23 of its total potential returns per unit of risk. Partners Iii Opportunity is currently generating about -0.28 per unit of volatility. If you would invest  1,243  in Partners Iii Opportunity on December 2, 2024 and sell it today you would lose (36.00) from holding Partners Iii Opportunity or give up 2.9% of portfolio value over 90 days.

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

Hodges Small Cap  vs.  Partners Iii Opportunity

Hodges Small Cap

Risk-Adjusted Performance

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 weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Partners Iii Opportunity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Partners Iii Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Hodges Small and Partners Iii

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

The idea behind Hodges Small Cap and Partners Iii Opportunity 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.