Correlation Between Champlain Small and Government Long
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Government Long 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 Government Long into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Government Long Bond, you can compare the effects of market volatilities on Champlain Small and Government Long 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 Government Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Government Long.
Diversification Opportunities for Champlain Small and Government Long
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Champlain and Government is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Government Long Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Long 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 Government Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Long Bond has no effect on the direction of Champlain Small i.e., Champlain Small and Government Long go up and down completely randomly.
Pair Corralation between Champlain Small and Government Long
Assuming the 90 days horizon Champlain Small is expected to generate 0.92 times more return on investment than Government Long. However, Champlain Small is 1.08 times less risky than Government Long. It trades about 0.05 of its potential returns per unit of risk. Government Long Bond is currently generating about -0.02 per unit of risk. If you would invest 2,036 in Champlain Small on August 31, 2024 and sell it today you would earn a total of 514.00 from holding Champlain Small or generate 25.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Champlain Small vs. Government Long Bond
Performance |
| Timeline |
| Champlain Small |
| Government Long Bond |
Champlain Small and Government Long Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Government Long
The main advantage of trading using opposite Champlain Small and Government Long positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Government Long 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 Government Long will offset losses from the drop in Government Long's long position.| Champlain Small vs. The Hartford Midcap | Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Wells Fargo Special | Champlain Small vs. Baron Emerging Markets |
| Government Long vs. Kinetics Small Cap | Government Long vs. Champlain Small | Government Long vs. Jpmorgan Small Cap | Government Long vs. Touchstone Small 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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