Correlation Between Amg Southernsun and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Amg Southernsun and Hodges Small 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 Amg Southernsun and Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amg Southernsun Equity and Hodges Small Cap, you can compare the effects of market volatilities on Amg Southernsun and Hodges Small 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 Amg Southernsun with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amg Southernsun and Hodges Small.
Diversification Opportunities for Amg Southernsun and Hodges Small
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amg and Hodges is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Amg Southernsun Equity and Hodges Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Cap and Amg Southernsun 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 Amg Southernsun Equity are associated (or correlated) with Hodges Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Small Cap has no effect on the direction of Amg Southernsun i.e., Amg Southernsun and Hodges Small go up and down completely randomly.
Pair Corralation between Amg Southernsun and Hodges Small
Assuming the 90 days horizon Amg Southernsun Equity is expected to under-perform the Hodges Small. In addition to that, Amg Southernsun is 1.03 times more volatile than Hodges Small Cap. It trades about -0.12 of its total potential returns per unit of risk. Hodges Small Cap is currently generating about -0.06 per unit of volatility. If you would invest 2,315 in Hodges Small Cap on September 26, 2024 and sell it today you would lose (190.00) from holding Hodges Small Cap or give up 8.21% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Amg Southernsun Equity vs. Hodges Small Cap
Performance |
Timeline |
Amg Southernsun Equity |
Hodges Small Cap |
Amg Southernsun and Hodges Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Amg Southernsun and Hodges Small
The main advantage of trading using opposite Amg Southernsun and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amg Southernsun position performs unexpectedly, Hodges Small 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 Hodges Small will offset losses from the drop in Hodges Small's long position.Amg Southernsun vs. Hodges Small Cap | Amg Southernsun vs. Walthausen Small Cap | Amg Southernsun vs. Matthew 25 Fund | Amg Southernsun vs. Amg Yacktman Focused |
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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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