Correlation Between Champlain Small and Old Westbury
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Old Westbury 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 Old Westbury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Old Westbury Small, you can compare the effects of market volatilities on Champlain Small and Old Westbury 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 Old Westbury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Old Westbury.
Diversification Opportunities for Champlain Small and Old Westbury
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Champlain and Old is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Old Westbury Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Westbury Small 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 Old Westbury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Westbury Small has no effect on the direction of Champlain Small i.e., Champlain Small and Old Westbury go up and down completely randomly.
Pair Corralation between Champlain Small and Old Westbury
Assuming the 90 days horizon Champlain Small is expected to generate 1.74 times more return on investment than Old Westbury. However, Champlain Small is 1.74 times more volatile than Old Westbury Small. It trades about 0.13 of its potential returns per unit of risk. Old Westbury Small is currently generating about 0.1 per unit of risk. If you would invest 2,504 in Champlain Small on September 14, 2024 and sell it today you would earn a total of 64.00 from holding Champlain Small or generate 2.56% 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. Old Westbury Small
Performance |
| Timeline |
| Champlain Small |
| Old Westbury Small |
Champlain Small and Old Westbury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Old Westbury
The main advantage of trading using opposite Champlain Small and Old Westbury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Old Westbury 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 Old Westbury will offset losses from the drop in Old Westbury'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 |
| Old Westbury vs. Rational Defensive Growth | Old Westbury vs. Smallcap Growth Fund | Old Westbury vs. Small Pany Growth | Old Westbury vs. Qs Moderate Growth |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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