Correlation Between Huber Capital and Davidson Multi-cap

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

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

Diversification Opportunities for Huber Capital and Davidson Multi-cap

0.87

Correlation Coefficient

Huber Capital  Davidson Multi-cap

Very poor diversification

The 3 months correlation between Huber and Davidson is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Diversified and Davidson Multi Cap Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Davidson Multi Cap and Huber Capital 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 Huber Capital Diversified are associated (or correlated) with Davidson Multi-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Davidson Multi Cap has no effect on the direction of Huber Capital i.e., Huber Capital and Davidson Multi-cap go up and down completely randomly.

Pair Corralation between Huber Capital and Davidson Multi-cap

Assuming the 90 days horizon Huber Capital Diversified is expected to generate 0.88 times more return on investment than Davidson Multi-cap. However, Huber Capital Diversified is 1.13 times less risky than Davidson Multi-cap. It trades about -0.03 of its potential returns per unit of risk. Davidson Multi Cap Equity is currently generating about -0.03 per unit of risk. If you would invest  2,475  in Huber Capital Diversified on December 2, 2024 and sell it today you would lose (39.00) from holding Huber Capital Diversified or give up 1.58% of portfolio value over 90 days.

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

Huber Capital Diversified  vs.  Davidson Multi Cap Equity

Huber Capital Diversified

Risk-Adjusted Performance

Very Weak

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

Davidson Multi Cap

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Huber Capital and Davidson Multi-cap

The main advantage of trading using opposite Huber Capital and Davidson Multi-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huber Capital position performs unexpectedly, Davidson Multi-cap 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 Davidson Multi-cap will offset losses from the drop in Davidson Multi-cap's long position.

The idea behind Huber Capital Diversified and Davidson Multi Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.