Correlation Between Hussman Strategic and Largecap

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

By analyzing existing cross correlation between Hussman Strategic Total and Largecap Sp 500, you can compare the effects of market volatilities on Hussman Strategic and Largecap 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 Hussman Strategic with a short position of Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hussman Strategic and Largecap.

Diversification Opportunities for Hussman Strategic and Largecap

-0.35

Correlation Coefficient

Hussman Strategic  Largecap

Very good diversification

The 3 months correlation between Hussman and Largecap is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Hussman Strategic Total and Largecap Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largecap Sp 500 and Hussman Strategic 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 Hussman Strategic Total are associated (or correlated) with Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largecap Sp 500 has no effect on the direction of Hussman Strategic i.e., Hussman Strategic and Largecap go up and down completely randomly.

Pair Corralation between Hussman Strategic and Largecap

Assuming the 90 days horizon Hussman Strategic Total is expected to under-perform the Largecap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hussman Strategic Total is 1.77 times less risky than Largecap. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Largecap Sp 500 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  2,777  in Largecap Sp 500 on September 15, 2024 and sell it today you would earn a total of  214.00  from holding Largecap Sp 500 or generate 7.71% return on investment over 90 days.

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

Hussman Strategic Total  vs.  Largecap Sp 500

Hussman Strategic Total

Risk-Adjusted Performance

0 of 100

Very Weak

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

Largecap Sp 500

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Largecap Sp 500 are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Largecap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hussman Strategic and Largecap

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

The idea behind Hussman Strategic Total and Largecap Sp 500 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.