Correlation Between Huber Capital and Sierra Strategic

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

Diversification Opportunities for Huber Capital and Sierra Strategic

-0.46

Correlation Coefficient

Huber Capital  Sierra Strategic

Very good diversification

The 3 months correlation between Huber and Sierra is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Equity and Sierra Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sierra Strategic Income 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 Sierra Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sierra Strategic Income has no effect on the direction of Huber Capital i.e., Huber Capital and Sierra Strategic go up and down completely randomly.

Pair Corralation between Huber Capital and Sierra Strategic

Assuming the 90 days horizon Huber Capital Equity is expected to generate 3.73 times more return on investment than Sierra Strategic. However, Huber Capital is 3.73 times more volatile than Sierra Strategic Income. It trades about 0.11 of its potential returns per unit of risk. Sierra Strategic Income is currently generating about 0.12 per unit of risk. If you would invest  2,585  in Huber Capital Equity on September 12, 2024 and sell it today you would earn a total of  830.00  from holding Huber Capital Equity or generate 32.11% 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.  Sierra Strategic Income

Huber Capital Equity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Equity are ranked lower than 11 (%) 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.

Sierra Strategic Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sierra Strategic Income has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Sierra Strategic 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 Sierra Strategic

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

The idea behind Huber Capital Equity and Sierra Strategic Income 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.