Correlation Between Hotchkis Wiley and Dreyfus Smallcap

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

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

Diversification Opportunities for Hotchkis Wiley and Dreyfus Smallcap

0.69

Correlation Coefficient

Hotchkis Wiley  Dreyfus Smallcap

Poor diversification

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

Pair Corralation between Hotchkis Wiley and Dreyfus Smallcap

Assuming the 90 days horizon Hotchkis Wiley is expected to generate 11.3 times less return on investment than Dreyfus Smallcap. In addition to that, Hotchkis Wiley is 1.31 times more volatile than Dreyfus Smallcap Stock. It trades about 0.01 of its total potential returns per unit of risk. Dreyfus Smallcap Stock is currently generating about 0.15 per unit of volatility. If you would invest  2,679  in Dreyfus Smallcap Stock on September 12, 2024 and sell it today you would earn a total of  319.00  from holding Dreyfus Smallcap Stock or generate 11.91% return on investment over 90 days.

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

Hotchkis Wiley Small  vs.  Dreyfus Smallcap Stock

Hotchkis Wiley Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dreyfus Smallcap Stock

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Hotchkis Wiley and Dreyfus Smallcap

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

The idea behind Hotchkis Wiley Small and Dreyfus Smallcap Stock 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.