Correlation Between Huber Capital and Inverse Mid-cap

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

Diversification Opportunities for Huber Capital and Inverse Mid-cap

-0.37

Correlation Coefficient

Huber Capital  Inverse Mid-cap

Very good diversification

The 3 months correlation between Huber and Inverse is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Diversified and Inverse Mid Cap Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Mid 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 Inverse Mid-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Mid Cap has no effect on the direction of Huber Capital i.e., Huber Capital and Inverse Mid-cap go up and down completely randomly.

Pair Corralation between Huber Capital and Inverse Mid-cap

Assuming the 90 days horizon Huber Capital Diversified is expected to under-perform the Inverse Mid-cap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Huber Capital Diversified is 5.17 times less risky than Inverse Mid-cap. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Inverse Mid Cap Strategy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  3,652  in Inverse Mid Cap Strategy on December 2, 2024 and sell it today you would earn a total of  362.00  from holding Inverse Mid Cap Strategy or generate 9.91% return on investment over 90 days.

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

Huber Capital Diversified  vs.  Inverse Mid Cap Strategy

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.

Inverse Mid Cap

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Inverse Mid Cap Strategy are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Inverse Mid-cap showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Huber Capital and Inverse Mid-cap

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

The idea behind Huber Capital Diversified and Inverse Mid Cap Strategy 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.