Correlation Between Undiscovered Managers and Hodges Small
Can any of the company-specific risk be diversified away by investing in both Undiscovered Managers 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 Undiscovered Managers and Hodges Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Undiscovered Managers Behavioral and Hodges Small Intrinsic, you can compare the effects of market volatilities on Undiscovered Managers 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 Undiscovered Managers with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Undiscovered Managers and Hodges Small.
Diversification Opportunities for Undiscovered Managers and Hodges Small
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Undiscovered and Hodges is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Undiscovered Managers Behavior and Hodges Small Intrinsic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Small Intrinsic and Undiscovered Managers 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 Undiscovered Managers Behavioral 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 Intrinsic has no effect on the direction of Undiscovered Managers i.e., Undiscovered Managers and Hodges Small go up and down completely randomly.
Pair Corralation between Undiscovered Managers and Hodges Small
Assuming the 90 days horizon Undiscovered Managers Behavioral is expected to under-perform the Hodges Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Undiscovered Managers Behavioral is 1.28 times less risky than Hodges Small. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Hodges Small Intrinsic is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,951 in Hodges Small Intrinsic on September 11, 2025 and sell it today you would lose (53.00) from holding Hodges Small Intrinsic or give up 2.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Undiscovered Managers Behavior vs. Hodges Small Intrinsic
Performance |
| Timeline |
| Undiscovered Managers |
| Hodges Small Intrinsic |
Undiscovered Managers and Hodges Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Undiscovered Managers and Hodges Small
The main advantage of trading using opposite Undiscovered Managers and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Undiscovered Managers 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.The idea behind Undiscovered Managers Behavioral and Hodges Small Intrinsic 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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