Correlation Between Champlain Small and Foreign Bond
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Foreign Bond 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 Foreign Bond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Foreign Bond Fund, you can compare the effects of market volatilities on Champlain Small and Foreign Bond 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 Foreign Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Foreign Bond.
Diversification Opportunities for Champlain Small and Foreign Bond
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Champlain and Foreign is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Foreign Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Bond 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 Foreign Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Bond has no effect on the direction of Champlain Small i.e., Champlain Small and Foreign Bond go up and down completely randomly.
Pair Corralation between Champlain Small and Foreign Bond
Assuming the 90 days horizon Champlain Small is expected to generate 2.53 times more return on investment than Foreign Bond. However, Champlain Small is 2.53 times more volatile than Foreign Bond Fund. It trades about 0.13 of its potential returns per unit of risk. Foreign Bond Fund is currently generating about 0.15 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Foreign Bond Fund
Performance |
| Timeline |
| Champlain Small |
| Foreign Bond |
Champlain Small and Foreign Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Foreign Bond
The main advantage of trading using opposite Champlain Small and Foreign Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Foreign Bond 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 Foreign Bond will offset losses from the drop in Foreign Bond'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 |
| Foreign Bond vs. Sprott Gold Equity | Foreign Bond vs. Great West Goldman Sachs | Foreign Bond vs. Europac Gold Fund | Foreign Bond vs. Global Gold Fund |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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