Correlation Between Champlain Small and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Blue Chip 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 Blue Chip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Blue Chip Growth, you can compare the effects of market volatilities on Champlain Small and Blue Chip 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 Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Blue Chip.
Diversification Opportunities for Champlain Small and Blue Chip
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Champlain and Blue is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Blue Chip Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip Growth 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Growth has no effect on the direction of Champlain Small i.e., Champlain Small and Blue Chip go up and down completely randomly.
Pair Corralation between Champlain Small and Blue Chip
Assuming the 90 days horizon Champlain Small is expected to generate 2.33 times less return on investment than Blue Chip. But when comparing it to its historical volatility, Champlain Small is 1.03 times less risky than Blue Chip. It trades about 0.05 of its potential returns per unit of risk. Blue Chip Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,579 in Blue Chip Growth on September 4, 2024 and sell it today you would earn a total of 2,689 from holding Blue Chip Growth or generate 75.13% 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. Blue Chip Growth
Performance |
| Timeline |
| Champlain Small |
| Blue Chip Growth |
Champlain Small and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Blue Chip
The main advantage of trading using opposite Champlain Small and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Blue Chip 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 Blue Chip will offset losses from the drop in Blue Chip's long position.| Champlain Small vs. The Hartford Midcap | Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Wells Fargo Special | Champlain Small vs. Washington Mutual Investors |
| Blue Chip vs. Hennessy Bp Energy | Blue Chip vs. Adams Natural Resources | Blue Chip vs. Calvert Global Energy | Blue Chip vs. Gamco Natural Resources |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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