Correlation Between Champlain Small and Western Asset
Can any of the company-specific risk be diversified away by investing in both Champlain Small and Western Asset 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 Western Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Champlain Small and Western Asset Intermediate, you can compare the effects of market volatilities on Champlain Small and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Western Asset.
Diversification Opportunities for Champlain Small and Western Asset
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Champlain and WESTERN is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Western Asset Intermediate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Interm 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Interm has no effect on the direction of Champlain Small i.e., Champlain Small and Western Asset go up and down completely randomly.
Pair Corralation between Champlain Small and Western Asset
Assuming the 90 days horizon Champlain Small is expected to generate 6.55 times more return on investment than Western Asset. However, Champlain Small is 6.55 times more volatile than Western Asset Intermediate. It trades about 0.27 of its potential returns per unit of risk. Western Asset Intermediate is currently generating about 0.06 per unit of risk. If you would invest 2,324 in Champlain Small on September 5, 2024 and sell it today you would earn a total of 220.00 from holding Champlain Small or generate 9.47% 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. Western Asset Intermediate
Performance |
| Timeline |
| Champlain Small |
| Western Asset Interm |
Champlain Small and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Champlain Small and Western Asset
The main advantage of trading using opposite Champlain Small and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Champlain Small position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Champlain Small vs. Mfs Emerging Markets | Champlain Small vs. Washington Mutual Investors | Champlain Small vs. Aquagold International | Champlain Small vs. Morningstar Unconstrained Allocation |
| Western Asset vs. Ab Small Cap | Western Asset vs. Touchstone Small Cap | Western Asset vs. Small Midcap Dividend Income | Western Asset 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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