Correlation Between Champlain Small and Regional Bank
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Regional Bank 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 Regional Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Regional Bank Fund, you can compare the effects of market volatilities on Champlain Small and Regional Bank 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 Regional Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Regional Bank.
Diversification Opportunities for Champlain Small and Regional Bank
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Champlain and Regional is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Regional Bank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Bank 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 Regional Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Bank has no effect on the direction of Champlain Small i.e., Champlain Small and Regional Bank go up and down completely randomly.
Pair Corralation between Champlain Small and Regional Bank
Assuming the 90 days horizon Champlain Small is expected to generate 1.58 times less return on investment than Regional Bank. But when comparing it to its historical volatility, Champlain Small is 1.5 times less risky than Regional Bank. It trades about 0.01 of its potential returns per unit of risk. Regional Bank Fund is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,601 in Regional Bank Fund on October 13, 2024 and sell it today you would earn a total of 133.00 from holding Regional Bank Fund or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Regional Bank Fund
Performance |
| Timeline |
| Champlain Small |
| Regional Bank |
Champlain Small and Regional Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Regional Bank
The main advantage of trading using opposite Champlain Small and Regional Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Regional Bank 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 Regional Bank will offset losses from the drop in Regional Bank'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 |
| Regional Bank vs. Us Vector Equity | Regional Bank vs. Alternative Asset Allocation | Regional Bank vs. Semiconductor Ultrasector Profund | Regional Bank vs. Tax Managed Large Cap |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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