Correlation Between Us Small and Hodges Small

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

By analyzing existing cross correlation between Us Small Cap and Hodges Small Intrinsic, you can compare the effects of market volatilities on Us Small 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 Us Small with a short position of Hodges Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Small and Hodges Small.

Diversification Opportunities for Us Small and Hodges Small

0.98

Correlation Coefficient

Us Small  Hodges Small

Almost no diversification

The 3 months correlation between DFSVX and Hodges is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap 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 Us Small 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 Us Small Cap 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 Us Small i.e., Us Small and Hodges Small go up and down completely randomly.

Pair Corralation between Us Small and Hodges Small

Assuming the 90 days horizon Us Small is expected to generate 1.09 times less return on investment than Hodges Small. But when comparing it to its historical volatility, Us Small Cap is 1.09 times less risky than Hodges Small. It trades about 0.19 of its potential returns per unit of risk. Hodges Small Intrinsic is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,567  in Hodges Small Intrinsic on May 1, 2025 and sell it today you would earn a total of  250.00  from holding Hodges Small Intrinsic or generate 15.95% return on investment over 90 days.

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

Us Small Cap  vs.  Hodges Small Intrinsic

Us Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Small Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Small showed solid returns over the last few months and may actually be approaching a breakup point.

Hodges Small Intrinsic

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hodges Small Intrinsic are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hodges Small showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Us Small and Hodges Small

The main advantage of trading using opposite Us Small and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Small 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 Us Small Cap 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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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.