Correlation Between Champlain Small and Congress Large
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Congress Large 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 Champlain Small and Congress Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Congress Large Cap, you can compare the effects of market volatilities on Champlain Small and Congress Large 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 Champlain Small with a short position of Congress Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Congress Large.
Diversification Opportunities for Champlain Small and Congress Large
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Champlain and Congress is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Congress Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Congress Large Cap and Champlain 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 Champlain Small are associated (or correlated) with Congress Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Congress Large Cap has no effect on the direction of Champlain Small i.e., Champlain Small and Congress Large go up and down completely randomly.
Pair Corralation between Champlain Small and Congress Large
Assuming the 90 days horizon Champlain Small is expected to generate 1.77 times more return on investment than Congress Large. However, Champlain Small is 1.77 times more volatile than Congress Large Cap. It trades about 0.27 of its potential returns per unit of risk. Congress Large Cap is currently generating about 0.35 per unit of risk. If you would invest 2,324 in Champlain Small on September 5, 2024 and sell it today you would earn a total of 220.00 from holding Champlain Small or generate 9.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Congress Large Cap
Performance |
| Timeline |
| Champlain Small |
| Congress Large Cap |
Champlain Small and Congress Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Congress Large
The main advantage of trading using opposite Champlain Small and Congress Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Congress Large 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 Congress Large will offset losses from the drop in Congress Large's long position.| Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Washington Mutual Investors | Champlain Small vs. Aquagold International | Champlain Small vs. Morningstar Unconstrained Allocation |
| Congress Large vs. Qs Small Capitalization | Congress Large vs. Ab Small Cap | Congress Large vs. Champlain Small | Congress Large vs. Glg Intl Small |
Check out your portfolio center.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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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