Correlation Between Huber Capital and Franklin Small-mid

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

Diversification Opportunities for Huber Capital and Franklin Small-mid

0.95

Correlation Coefficient

Huber Capital  Franklin Small-mid

Almost no diversification

The 3 months correlation between Huber and Franklin is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Diversified and Franklin Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Small Mid 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 Franklin Small-mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Small Mid has no effect on the direction of Huber Capital i.e., Huber Capital and Franklin Small-mid go up and down completely randomly.

Pair Corralation between Huber Capital and Franklin Small-mid

Assuming the 90 days horizon Huber Capital Diversified is expected to generate 0.72 times more return on investment than Franklin Small-mid. However, Huber Capital Diversified is 1.4 times less risky than Franklin Small-mid. It trades about -0.04 of its potential returns per unit of risk. Franklin Small Mid Cap is currently generating about -0.1 per unit of risk. If you would invest  2,404  in Huber Capital Diversified on December 22, 2024 and sell it today you would lose (61.00) from holding Huber Capital Diversified or give up 2.54% of portfolio value over 90 days.

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

Huber Capital Diversified  vs.  Franklin Small Mid Cap

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.

Franklin Small Mid

Risk-Adjusted Performance

Very Weak

Over the last 90 days Franklin Small Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Huber Capital and Franklin Small-mid

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

The idea behind Huber Capital Diversified and Franklin Small Mid 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.