Correlation Between Champlain Small and Sterling Capital
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Sterling Capital 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 Sterling Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Sterling Capital Behavioral, you can compare the effects of market volatilities on Champlain Small and Sterling Capital 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 Sterling Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Sterling Capital.
Diversification Opportunities for Champlain Small and Sterling Capital
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Champlain and Sterling is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Sterling Capital Behavioral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Capital Beh 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 Sterling Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Capital Beh has no effect on the direction of Champlain Small i.e., Champlain Small and Sterling Capital go up and down completely randomly.
Pair Corralation between Champlain Small and Sterling Capital
Assuming the 90 days horizon Champlain Small is expected to generate 1.44 times more return on investment than Sterling Capital. However, Champlain Small is 1.44 times more volatile than Sterling Capital Behavioral. It trades about 0.05 of its potential returns per unit of risk. Sterling Capital Behavioral is currently generating about 0.06 per unit of risk. If you would invest 2,005 in Champlain Small on August 30, 2024 and sell it today you would earn a total of 545.00 from holding Champlain Small or generate 27.18% 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. Sterling Capital Behavioral
Performance |
| Timeline |
| Champlain Small |
| Sterling Capital Beh |
Champlain Small and Sterling Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Sterling Capital
The main advantage of trading using opposite Champlain Small and Sterling Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Sterling Capital 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 Sterling Capital will offset losses from the drop in Sterling Capital's long position.| Champlain Small vs. Putnam Equity Income | Champlain Small vs. Putnam Growth Opportunities | Champlain Small vs. HUMANA INC | Champlain Small vs. Aquagold International |
| Sterling Capital vs. Fisher Small Cap | Sterling Capital vs. Champlain Small | Sterling Capital vs. Chartwell Small Cap | Sterling Capital vs. Us 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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