Correlation Between Champlain Small and Government Securities
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Government Securities 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 Securities 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 Securities Fund, you can compare the effects of market volatilities on Champlain Small and Government Securities 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 Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Government Securities.
Diversification Opportunities for Champlain Small and Government Securities
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Champlain and Government is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Government Securities Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Government Securities 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 Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Government Securities has no effect on the direction of Champlain Small i.e., Champlain Small and Government Securities go up and down completely randomly.
Pair Corralation between Champlain Small and Government Securities
Assuming the 90 days horizon Champlain Small is expected to generate 4.6 times more return on investment than Government Securities. However, Champlain Small is 4.6 times more volatile than Government Securities Fund. It trades about 0.31 of its potential returns per unit of risk. Government Securities Fund is currently generating about 0.2 per unit of risk. If you would invest 2,311 in Champlain Small on September 2, 2024 and sell it today you would earn a total of 241.00 from holding Champlain Small or generate 10.43% 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 Securities Fund
Performance |
| Timeline |
| Champlain Small |
| Government Securities |
Champlain Small and Government Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Government Securities
The main advantage of trading using opposite Champlain Small and Government Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Government Securities 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 Securities will offset losses from the drop in Government Securities' 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 |
| Government Securities vs. Small Midcap Dividend Income | Government Securities vs. Kinetics Small Cap | Government Securities vs. Chartwell Small Cap | Government Securities vs. Champlain Small |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |