Correlation Between William Blair and Hotchkis Wiley

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

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

Diversification Opportunities for William Blair and Hotchkis Wiley

0.2

Correlation Coefficient

William Blair  Hotchkis Wiley

Modest diversification

The 3 months correlation between William and Hotchkis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding William Blair Small and Hotchkis Wiley Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Diver and William Blair 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 William Blair Small 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 Diver has no effect on the direction of William Blair i.e., William Blair and Hotchkis Wiley go up and down completely randomly.

Pair Corralation between William Blair and Hotchkis Wiley

Assuming the 90 days horizon William Blair Small is expected to generate 0.68 times more return on investment than Hotchkis Wiley. However, William Blair Small is 1.46 times less risky than Hotchkis Wiley. It trades about 0.15 of its potential returns per unit of risk. Hotchkis Wiley Diversified is currently generating about -0.06 per unit of risk. If you would invest  3,668  in William Blair Small on September 13, 2024 and sell it today you would earn a total of  397.00  from holding William Blair Small or generate 10.82% return on investment over 90 days.

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

William Blair Small  vs.  Hotchkis Wiley Diversified

William Blair Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Hotchkis Wiley Diver

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with William Blair and Hotchkis Wiley

The main advantage of trading using opposite William Blair and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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 William Blair Small and Hotchkis Wiley Diversified 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.