Correlation Between Hotchkis Wiley and Global Technology

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

By analyzing existing cross correlation between Hotchkis Wiley International and Global Technology Portfolio, you can compare the effects of market volatilities on Hotchkis Wiley and Global Technology 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 Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hotchkis Wiley and Global Technology.

Diversification Opportunities for Hotchkis Wiley and Global Technology

-0.5

Correlation Coefficient

Hotchkis Wiley  Global Technology

Very good diversification

The 3 months correlation between Hotchkis and Global is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hotchkis Wiley International and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology 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 International are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Hotchkis Wiley i.e., Hotchkis Wiley and Global Technology go up and down completely randomly.

Pair Corralation between Hotchkis Wiley and Global Technology

Assuming the 90 days horizon Hotchkis Wiley International is expected to under-perform the Global Technology. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hotchkis Wiley International is 1.55 times less risky than Global Technology. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Global Technology Portfolio is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,913  in Global Technology Portfolio on September 4, 2024 and sell it today you would earn a total of  226.00  from holding Global Technology Portfolio or generate 11.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Hotchkis Wiley International  vs.  Global Technology Portfolio

Hotchkis Wiley Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hotchkis Wiley International 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.

Global Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Technology Portfolio are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Global Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Hotchkis Wiley and Global Technology

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

The idea behind Hotchkis Wiley International and Global Technology Portfolio 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.