Correlation Between Champlain Small and Midcap Growth
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Midcap Growth 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 Midcap Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Midcap Growth Fund, you can compare the effects of market volatilities on Champlain Small and Midcap Growth 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 Midcap Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Midcap Growth.
Diversification Opportunities for Champlain Small and Midcap Growth
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Champlain and Midcap is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Midcap Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Midcap 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 Midcap Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Midcap Growth has no effect on the direction of Champlain Small i.e., Champlain Small and Midcap Growth go up and down completely randomly.
Pair Corralation between Champlain Small and Midcap Growth
Assuming the 90 days horizon Champlain Small is expected to generate 1.14 times less return on investment than Midcap Growth. In addition to that, Champlain Small is 1.29 times more volatile than Midcap Growth Fund. It trades about 0.17 of its total potential returns per unit of risk. Midcap Growth Fund is currently generating about 0.25 per unit of volatility. If you would invest 722.00 in Midcap Growth Fund on September 2, 2024 and sell it today you would earn a total of 106.00 from holding Midcap Growth Fund or generate 14.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Champlain Small vs. Midcap Growth Fund
Performance |
| Timeline |
| Champlain Small |
| Midcap Growth |
Champlain Small and Midcap Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Midcap Growth
The main advantage of trading using opposite Champlain Small and Midcap Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Midcap Growth 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 Midcap Growth will offset losses from the drop in Midcap Growth'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 |
| Midcap Growth vs. Wisdomtree Siegel Moderate | Midcap Growth vs. American Funds Retirement | Midcap Growth vs. Dimensional Retirement Income | Midcap Growth vs. Lifestyle Ii Moderate |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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