Correlation Between Huber Capital and Metropolitan West

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

By analyzing existing cross correlation between Huber Capital Equity and Metropolitan West Intermediate, you can compare the effects of market volatilities on Huber Capital and Metropolitan West 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 Metropolitan West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huber Capital and Metropolitan West.

Diversification Opportunities for Huber Capital and Metropolitan West

-0.47

Correlation Coefficient

Huber Capital  Metropolitan West

Very good diversification

The 3 months correlation between Huber and Metropolitan is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Equity and Metropolitan West Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan West 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 Equity are associated (or correlated) with Metropolitan West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan West has no effect on the direction of Huber Capital i.e., Huber Capital and Metropolitan West go up and down completely randomly.

Pair Corralation between Huber Capital and Metropolitan West

Assuming the 90 days horizon Huber Capital Equity is expected to under-perform the Metropolitan West. In addition to that, Huber Capital is 3.76 times more volatile than Metropolitan West Intermediate. It trades about -0.02 of its total potential returns per unit of risk. Metropolitan West Intermediate is currently generating about 0.16 per unit of volatility. If you would invest  921.00  in Metropolitan West Intermediate on December 30, 2024 and sell it today you would earn a total of  21.00  from holding Metropolitan West Intermediate or generate 2.28% return on investment over 90 days.

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

Huber Capital Equity  vs.  Metropolitan West Intermediate

Huber Capital Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Huber Capital Equity 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.

Metropolitan West

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolitan West Intermediate are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Metropolitan West 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 Metropolitan West

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

The idea behind Huber Capital Equity and Metropolitan West Intermediate 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.