Correlation Between Huber Capital and Driehaus Small

Can any of the company-specific risk be diversified away by investing in both Huber Capital and Driehaus 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 Huber Capital and Driehaus Small 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 Driehaus Small Cap, you can compare the effects of market volatilities on Huber Capital and Driehaus 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 Huber Capital with a short position of Driehaus Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huber Capital and Driehaus Small.

Diversification Opportunities for Huber Capital and Driehaus Small

0.96

Correlation Coefficient

Huber Capital  Driehaus Small

Almost no diversification

The 3 months correlation between Huber and Driehaus is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Diversified and Driehaus Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Driehaus Small 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 Driehaus Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Driehaus Small Cap has no effect on the direction of Huber Capital i.e., Huber Capital and Driehaus Small go up and down completely randomly.

Pair Corralation between Huber Capital and Driehaus Small

Assuming the 90 days horizon Huber Capital is expected to generate 1.52 times less return on investment than Driehaus Small. But when comparing it to its historical volatility, Huber Capital Diversified is 1.54 times less risky than Driehaus Small. It trades about 0.09 of its potential returns per unit of risk. Driehaus Small Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,521  in Driehaus Small Cap on September 14, 2024 and sell it today you would earn a total of  994.00  from holding Driehaus Small Cap or generate 65.35% return on investment over 90 days.

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

Huber Capital Diversified  vs.  Driehaus Small Cap

Huber Capital Diversified

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Diversified are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Huber Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Driehaus Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Driehaus Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Driehaus Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huber Capital and Driehaus Small

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

The idea behind Huber Capital Diversified and Driehaus 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.