Correlation Between Hodges Blue and Hodges Fund

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

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

Diversification Opportunities for Hodges Blue and Hodges Fund

0.97

Correlation Coefficient

Hodges Blue  Hodges Fund

Almost no diversification

The 3 months correlation between Hodges and Hodges is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Hodges Blue Chip and Hodges Fund Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hodges Fund Retail and Hodges Blue 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 Hodges Blue Chip are associated (or correlated) with Hodges Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hodges Fund Retail has no effect on the direction of Hodges Blue i.e., Hodges Blue and Hodges Fund go up and down completely randomly.

Pair Corralation between Hodges Blue and Hodges Fund

Assuming the 90 days horizon Hodges Blue is expected to generate 1.08 times less return on investment than Hodges Fund. But when comparing it to its historical volatility, Hodges Blue Chip is 1.56 times less risky than Hodges Fund. It trades about 0.24 of its potential returns per unit of risk. Hodges Fund Retail is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  6,562  in Hodges Fund Retail on May 6, 2025 and sell it today you would earn a total of  938.00  from holding Hodges Fund Retail or generate 14.29% return on investment over 90 days.

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

Hodges Blue Chip  vs.  Hodges Fund Retail

Hodges Blue Chip

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hodges Blue Chip are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental drivers, Hodges Blue showed solid returns over the last few months and may actually be approaching a breakup point.

Hodges Fund Retail

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hodges Fund Retail are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Hodges Fund showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hodges Blue and Hodges Fund

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

The idea behind Hodges Blue Chip and Hodges Fund Retail 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.