Correlation Between Huber Capital and American Funds

Can any of the company-specific risk be diversified away by investing in both Huber Capital and American Funds 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 Huber Capital and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Huber Capital Diversified and American Funds Conservative, you can compare the effects of market volatilities on Huber Capital and American Funds 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 Huber Capital with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huber Capital and American Funds.

Diversification Opportunities for Huber Capital and American Funds

0.73

Correlation Coefficient

Huber Capital  American Funds

Poor diversification

The 3 months correlation between Huber and American is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Diversified and American Funds Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Conse and Huber Capital 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 Huber Capital Diversified are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Conse has no effect on the direction of Huber Capital i.e., Huber Capital and American Funds go up and down completely randomly.

Pair Corralation between Huber Capital and American Funds

Assuming the 90 days horizon Huber Capital Diversified is expected to generate 1.74 times more return on investment than American Funds. However, Huber Capital is 1.74 times more volatile than American Funds Conservative. It trades about 0.31 of its potential returns per unit of risk. American Funds Conservative is currently generating about 0.38 per unit of risk. If you would invest  2,155  in Huber Capital Diversified on February 14, 2024 and sell it today you would earn a total of  84.00  from holding Huber Capital Diversified or generate 3.9% return on investment over 90 days.

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

Huber Capital Diversified  vs.  American Funds Conservative

Huber Capital Diversified

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Diversified are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Huber Capital may actually be approaching a critical reversion point that can send shares even higher in June 2024.

American Funds Conse

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Funds Conservative are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, American Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Huber Capital and American Funds

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

The idea behind Huber Capital Diversified and American Funds Conservative 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 Stocks Directory module to find actively traded stocks across global markets.