Correlation Between Extended Market and Carillon Scout
Can any of the company-specific risk be diversified away by investing in both Extended Market and Carillon Scout 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 Extended Market and Carillon Scout into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Extended Market Index and Carillon Scout Mid, you can compare the effects of market volatilities on Extended Market and Carillon Scout 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 Extended Market with a short position of Carillon Scout. Check out your portfolio center. Please also check ongoing floating volatility patterns of Extended Market and Carillon Scout.
Diversification Opportunities for Extended Market and Carillon Scout
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Extended and Carillon is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Extended Market Index and Carillon Scout Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Scout Mid and Extended Market 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 Extended Market Index are associated (or correlated) with Carillon Scout. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Scout Mid has no effect on the direction of Extended Market i.e., Extended Market and Carillon Scout go up and down completely randomly.
Pair Corralation between Extended Market and Carillon Scout
Assuming the 90 days horizon Extended Market Index is expected to generate 1.31 times more return on investment than Carillon Scout. However, Extended Market is 1.31 times more volatile than Carillon Scout Mid. It trades about 0.3 of its potential returns per unit of risk. Carillon Scout Mid is currently generating about 0.38 per unit of risk. If you would invest 2,327 in Extended Market Index on August 28, 2024 and sell it today you would earn a total of 201.00 from holding Extended Market Index or generate 8.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Extended Market Index vs. Carillon Scout Mid
Performance |
| Timeline |
| Extended Market Index |
| Carillon Scout Mid |
Extended Market and Carillon Scout Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Extended Market and Carillon Scout
The main advantage of trading using opposite Extended Market and Carillon Scout positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Extended Market position performs unexpectedly, Carillon Scout 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 Carillon Scout will offset losses from the drop in Carillon Scout's long position.| Extended Market vs. Income Fund Income | Extended Market vs. Usaa Nasdaq 100 | Extended Market vs. Victory Diversified Stock | Extended Market vs. Intermediate Term Bond Fund |
| Carillon Scout vs. L Abbett Growth | Carillon Scout vs. Tfa Alphagen Growth | Carillon Scout vs. Chase Growth Fund | Carillon Scout vs. Small Pany Growth |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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