Correlation Between Hood River and Large Cap
Can any of the company-specific risk be diversified away by investing in both Hood River and Large Cap 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 Hood River and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hood River Small Cap and Large Cap Value, you can compare the effects of market volatilities on Hood River and Large Cap 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 Hood River with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hood River and Large Cap.
Diversification Opportunities for Hood River and Large Cap
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hood and Large is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hood River Small Cap and Large Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap Value and Hood River 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 Hood River Small Cap are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Value has no effect on the direction of Hood River i.e., Hood River and Large Cap go up and down completely randomly.
Pair Corralation between Hood River and Large Cap
Assuming the 90 days horizon Hood River Small Cap is expected to generate 1.95 times more return on investment than Large Cap. However, Hood River is 1.95 times more volatile than Large Cap Value. It trades about 0.16 of its potential returns per unit of risk. Large Cap Value is currently generating about 0.1 per unit of risk. If you would invest 7,004 in Hood River Small Cap on June 8, 2025 and sell it today you would earn a total of 898.00 from holding Hood River Small Cap or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hood River Small Cap vs. Large Cap Value
Performance |
| Timeline |
| Hood River Small |
| Large Cap Value |
Hood River and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hood River and Large Cap
The main advantage of trading using opposite Hood River and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hood River position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| Hood River vs. Hood River Small Cap | Hood River vs. Driehaus Small Cap | Hood River vs. Virtus Kar Small Cap | Hood River vs. Vulcan Value Partners |
| Large Cap vs. Federated Government Income | Large Cap vs. Payden Government Fund | Large Cap vs. Us Government Securities | Large Cap vs. Jpmorgan Government Bond |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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