Correlation Between Huber Capital and Simt Tax

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

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

Diversification Opportunities for Huber Capital and Simt Tax

0.83

Correlation Coefficient

Huber Capital  Simt Tax

Very poor diversification

The 3 months correlation between Huber and Simt is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Equity and Simt Tax Managed Smallmid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt Tax Managed and Huber Capital 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 Huber Capital Equity are associated (or correlated) with Simt Tax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt Tax Managed has no effect on the direction of Huber Capital i.e., Huber Capital and Simt Tax go up and down completely randomly.

Pair Corralation between Huber Capital and Simt Tax

Assuming the 90 days horizon Huber Capital Equity is expected to generate 0.78 times more return on investment than Simt Tax. However, Huber Capital Equity is 1.28 times less risky than Simt Tax. It trades about 0.09 of its potential returns per unit of risk. Simt Tax Managed Smallmid is currently generating about 0.06 per unit of risk. If you would invest  2,356  in Huber Capital Equity on September 14, 2024 and sell it today you would earn a total of  1,042  from holding Huber Capital Equity or generate 44.23% return on investment over 90 days.

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

Huber Capital Equity  vs.  Simt Tax Managed Smallmid

Huber Capital Equity

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Equity are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. 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.

Simt Tax Managed

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Simt Tax Managed Smallmid are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Simt Tax may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Huber Capital and Simt Tax

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

The idea behind Huber Capital Equity and Simt Tax Managed Smallmid 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.