Correlation Between Hotchkis Wiley and Issachar Fund

Can any of the company-specific risk be diversified away by investing in both Hotchkis Wiley and Issachar Fund 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 Hotchkis Wiley and Issachar Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hotchkis Wiley Mid Cap and Issachar Fund Class, you can compare the effects of market volatilities on Hotchkis Wiley and Issachar Fund 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 Hotchkis Wiley with a short position of Issachar Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotchkis Wiley and Issachar Fund.

Diversification Opportunities for Hotchkis Wiley and Issachar Fund

0.53

Correlation Coefficient

Hotchkis Wiley  Issachar Fund

Very weak diversification

The 3 months correlation between Hotchkis and Issachar is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hotchkis Wiley Mid Cap and Issachar Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Issachar Fund Class and Hotchkis Wiley 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 Hotchkis Wiley Mid Cap are associated (or correlated) with Issachar Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Issachar Fund Class has no effect on the direction of Hotchkis Wiley i.e., Hotchkis Wiley and Issachar Fund go up and down completely randomly.

Pair Corralation between Hotchkis Wiley and Issachar Fund

Assuming the 90 days horizon Hotchkis Wiley Mid Cap is expected to generate 1.58 times more return on investment than Issachar Fund. However, Hotchkis Wiley is 1.58 times more volatile than Issachar Fund Class. It trades about 0.04 of its potential returns per unit of risk. Issachar Fund Class is currently generating about 0.01 per unit of risk. If you would invest  4,448  in Hotchkis Wiley Mid Cap on October 9, 2024 and sell it today you would earn a total of  1,102  from holding Hotchkis Wiley Mid Cap or generate 24.78% return on investment over 90 days.

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

Hotchkis Wiley Mid Cap  vs.  Issachar Fund Class

Hotchkis Wiley Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotchkis Wiley Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Hotchkis Wiley is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Issachar Fund Class

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Issachar Fund Class are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Issachar Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hotchkis Wiley and Issachar Fund

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

The idea behind Hotchkis Wiley Mid Cap and Issachar Fund Class 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.