Correlation Between Fulcrum Diversified and Huber Capital

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

By analyzing existing cross correlation between Fulcrum Diversified Absolute and Huber Capital Diversified, you can compare the effects of market volatilities on Fulcrum Diversified and Huber Capital 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 Fulcrum Diversified with a short position of Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Diversified and Huber Capital.

Diversification Opportunities for Fulcrum Diversified and Huber Capital

0.72

Correlation Coefficient

Fulcrum Diversified  Huber Capital

Poor diversification

The 3 months correlation between Fulcrum and Huber is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Diversified Absolute and Huber Capital Diversified in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Diversified and Fulcrum Diversified 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 Fulcrum Diversified Absolute are associated (or correlated) with Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Diversified has no effect on the direction of Fulcrum Diversified i.e., Fulcrum Diversified and Huber Capital go up and down completely randomly.

Pair Corralation between Fulcrum Diversified and Huber Capital

Assuming the 90 days horizon Fulcrum Diversified Absolute is expected to generate 0.43 times more return on investment than Huber Capital. However, Fulcrum Diversified Absolute is 2.3 times less risky than Huber Capital. It trades about -0.02 of its potential returns per unit of risk. Huber Capital Diversified is currently generating about -0.01 per unit of risk. If you would invest  938.00  in Fulcrum Diversified Absolute on September 22, 2024 and sell it today you would lose (5.00) from holding Fulcrum Diversified Absolute or give up 0.53% of portfolio value over 90 days.

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

Fulcrum Diversified Absolute  vs.  Huber Capital Diversified

Fulcrum Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

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

Huber Capital Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huber Capital Diversified has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pair Trading with Fulcrum Diversified and Huber Capital

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

The idea behind Fulcrum Diversified Absolute and Huber Capital 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.