Correlation Between Huber Capital and Aama Equity

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

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

Diversification Opportunities for Huber Capital and Aama Equity

0.88

Correlation Coefficient

Huber Capital  Aama Equity

Very poor diversification

The 3 months correlation between Huber and Aama is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Small and Aama Equity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aama Equity Fund 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 Small are associated (or correlated) with Aama Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aama Equity Fund has no effect on the direction of Huber Capital i.e., Huber Capital and Aama Equity go up and down completely randomly.

Pair Corralation between Huber Capital and Aama Equity

Assuming the 90 days horizon Huber Capital Small is expected to under-perform the Aama Equity. In addition to that, Huber Capital is 3.39 times more volatile than Aama Equity Fund. It trades about -0.13 of its total potential returns per unit of risk. Aama Equity Fund is currently generating about 0.06 per unit of volatility. If you would invest  1,995  in Aama Equity Fund on September 20, 2024 and sell it today you would earn a total of  9.00  from holding Aama Equity Fund or generate 0.45% return on investment over 90 days.

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

Huber Capital Small  vs.  Aama Equity Fund

Huber Capital Small

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. 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.

Aama Equity Fund

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aama Equity Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Aama Equity 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 Aama Equity

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

The idea behind Huber Capital Small and Aama Equity Fund 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.