Correlation Between Spectrum Income and Hodges Small

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

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

Diversification Opportunities for Spectrum Income and Hodges Small

0.78

Correlation Coefficient

Spectrum Income  Hodges Small

Poor diversification

The 3 months correlation between Spectrum and Hodges is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Income Fund 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 Spectrum Income 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 Spectrum Income Fund 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 Spectrum Income i.e., Spectrum Income and Hodges Small go up and down completely randomly.

Pair Corralation between Spectrum Income and Hodges Small

Assuming the 90 days horizon Spectrum Income is expected to generate 3.07 times less return on investment than Hodges Small. But when comparing it to its historical volatility, Spectrum Income Fund is 7.23 times less risky than Hodges Small. It trades about 0.24 of its potential returns per unit of risk. Hodges Small Intrinsic is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,692  in Hodges Small Intrinsic on May 20, 2025 and sell it today you would earn a total of  136.00  from holding Hodges Small Intrinsic or generate 8.04% return on investment over 90 days.

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

Spectrum Income Fund  vs.  Hodges Small Intrinsic

Spectrum Income

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Spectrum Income Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Spectrum Income is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hodges Small Intrinsic

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Hodges Small Intrinsic are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Hodges Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Spectrum Income and Hodges Small

The main advantage of trading using opposite Spectrum Income and Hodges Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Income 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 Spectrum Income Fund 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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.