Correlation Between Hunter Small and Financial Services

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

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

Diversification Opportunities for Hunter Small and Financial Services

-0.48

Correlation Coefficient

Hunter Small  Financial Services

Very good diversification

The 3 months correlation between Hunter and Financial is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hunter Small Cap and Financial Services Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Financial Services and Hunter 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 Hunter Small Cap are associated (or correlated) with Financial Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Financial Services has no effect on the direction of Hunter Small i.e., Hunter Small and Financial Services go up and down completely randomly.

Pair Corralation between Hunter Small and Financial Services

Assuming the 90 days horizon Hunter Small Cap is expected to generate 0.08 times more return on investment than Financial Services. However, Hunter Small Cap is 12.94 times less risky than Financial Services. It trades about 0.05 of its potential returns per unit of risk. Financial Services Portfolio is currently generating about -0.13 per unit of risk. If you would invest  1,261  in Hunter Small Cap on September 9, 2025 and sell it today you would earn a total of  37.00  from holding Hunter Small Cap or generate 2.93% return on investment over 90 days.

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

Hunter Small Cap  vs.  Financial Services Portfolio

Hunter Small Cap

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Hunter Small Cap are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hunter Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Financial Services

Risk-Adjusted Performance

Weakest

Over the last 90 days Financial Services Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in January 2026. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Hunter Small and Financial Services

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

The idea behind Hunter Small Cap and Financial Services Portfolio 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.