Correlation Between Champlain Small and Small Cap
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Small Cap Value, you can compare the effects of market volatilities on Champlain Small and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Small Cap.
Diversification Opportunities for Champlain Small and Small Cap
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Champlain and Small is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Champlain Small i.e., Champlain Small and Small Cap go up and down completely randomly.
Pair Corralation between Champlain Small and Small Cap
Assuming the 90 days horizon Champlain Small is expected to generate 0.91 times more return on investment than Small Cap. However, Champlain Small is 1.1 times less risky than Small Cap. It trades about 0.33 of its potential returns per unit of risk. Small Cap Value is currently generating about 0.23 per unit of risk. If you would invest 2,294 in Champlain Small on September 1, 2024 and sell it today you would earn a total of 258.00 from holding Champlain Small or generate 11.25% 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. Small Cap Value
Performance |
| Timeline |
| Champlain Small |
| Small Cap Value |
Champlain Small and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Small Cap
The main advantage of trading using opposite Champlain Small and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap'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 |
| Small Cap vs. Artisan Thematic Fund | Small Cap vs. T Rowe Price | Small Cap vs. Semiconductor Ultrasector Profund | Small Cap vs. Volumetric Fund Volumetric |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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