Correlation Between Smallcap Growth and Hotchkis Wiley

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Smallcap Growth and Hotchkis Wiley 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 Smallcap Growth and Hotchkis Wiley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smallcap Growth Fund and Hotchkis Wiley Large, you can compare the effects of market volatilities on Smallcap Growth and Hotchkis Wiley 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 Smallcap Growth with a short position of Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smallcap Growth and Hotchkis Wiley.

Diversification Opportunities for Smallcap Growth and Hotchkis Wiley

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Smallcap and Hotchkis is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Smallcap Growth Fund and Hotchkis Wiley Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Large and Smallcap Growth 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 Smallcap Growth Fund are associated (or correlated) with Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Large has no effect on the direction of Smallcap Growth i.e., Smallcap Growth and Hotchkis Wiley go up and down completely randomly.

Pair Corralation between Smallcap Growth and Hotchkis Wiley

Assuming the 90 days horizon Smallcap Growth Fund is expected to generate 1.27 times more return on investment than Hotchkis Wiley. However, Smallcap Growth is 1.27 times more volatile than Hotchkis Wiley Large. It trades about 0.02 of its potential returns per unit of risk. Hotchkis Wiley Large is currently generating about 0.03 per unit of risk. If you would invest  1,462  in Smallcap Growth Fund on October 22, 2024 and sell it today you would earn a total of  80.00  from holding Smallcap Growth Fund or generate 5.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Smallcap Growth Fund  vs.  Hotchkis Wiley Large

 Performance 
       Timeline  
Smallcap Growth 

Risk-Adjusted Performance

0 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Hotchkis Wiley Large 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.

Smallcap Growth and Hotchkis Wiley Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Smallcap Growth and Hotchkis Wiley

The main advantage of trading using opposite Smallcap Growth and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smallcap Growth position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley's long position.
The idea behind Smallcap Growth Fund and Hotchkis Wiley Large 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.
Check out your portfolio center.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

Other Complementary Tools

Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA