Correlation Between Huber Capital and Gotham Hedged

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

Diversification Opportunities for Huber Capital and Gotham Hedged

0.32

Correlation Coefficient

Huber Capital  Gotham Hedged

Weak diversification

The 3 months correlation between Huber and Gotham is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Diversified and Gotham Hedged E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Hedged E 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 Gotham Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Hedged E has no effect on the direction of Huber Capital i.e., Huber Capital and Gotham Hedged go up and down completely randomly.

Pair Corralation between Huber Capital and Gotham Hedged

Assuming the 90 days horizon Huber Capital Diversified is expected to generate 0.89 times more return on investment than Gotham Hedged. However, Huber Capital Diversified is 1.12 times less risky than Gotham Hedged. It trades about 0.08 of its potential returns per unit of risk. Gotham Hedged E is currently generating about 0.03 per unit of risk. If you would invest  1,787  in Huber Capital Diversified on October 12, 2024 and sell it today you would earn a total of  625.00  from holding Huber Capital Diversified or generate 34.97% return on investment over 90 days.

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

Huber Capital Diversified  vs.  Gotham Hedged E

Huber Capital Diversified

Risk-Adjusted Performance

0 of 100

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.

Gotham Hedged E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gotham Hedged E 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 fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Huber Capital and Gotham Hedged

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

The idea behind Huber Capital Diversified and Gotham Hedged E 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.