Correlation Between Kopernik Global and Hunter Small

Can any of the company-specific risk be diversified away by investing in both Kopernik Global and Hunter Small 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 Kopernik Global and Hunter Small into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kopernik Global All Cap and Hunter Small Cap, you can compare the effects of market volatilities on Kopernik Global and Hunter Small 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 Kopernik Global with a short position of Hunter Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kopernik Global and Hunter Small.

Diversification Opportunities for Kopernik Global and Hunter Small

0.32

Correlation Coefficient

Kopernik Global  Hunter Small

Weak diversification

The 3 months correlation between Kopernik and Hunter is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik Global All Cap and Hunter Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Small Cap and Kopernik Global 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 Kopernik Global All Cap are associated (or correlated) with Hunter Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Small Cap has no effect on the direction of Kopernik Global i.e., Kopernik Global and Hunter Small go up and down completely randomly.

Pair Corralation between Kopernik Global and Hunter Small

Assuming the 90 days horizon Kopernik Global All Cap is expected to under-perform the Hunter Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Kopernik Global All Cap is 1.68 times less risky than Hunter Small. The mutual fund trades about -0.18 of its potential returns per unit of risk. The Hunter Small Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,255  in Hunter Small Cap on October 23, 2024 and sell it today you would earn a total of  17.00  from holding Hunter Small Cap or generate 1.35% return on investment over 90 days.

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

Kopernik Global All Cap  vs.  Hunter Small Cap

Kopernik Global All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kopernik Global All Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Hunter Small Cap

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hunter Small Cap are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hunter Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kopernik Global and Hunter Small

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

The idea behind Kopernik Global All Cap and Hunter Small Cap 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.