Correlation Between Cambiar Smid and Walden Midcap

Can any of the company-specific risk be diversified away by investing in both Cambiar Smid and Walden Midcap 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 Cambiar Smid and Walden Midcap into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cambiar Smid Fund and Walden Midcap Fund, you can compare the effects of market volatilities on Cambiar Smid and Walden Midcap 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 Cambiar Smid with a short position of Walden Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambiar Smid and Walden Midcap.

Diversification Opportunities for Cambiar Smid and Walden Midcap

0.92

Correlation Coefficient

Cambiar Smid  Walden Midcap

Almost no diversification

The 3 months correlation between Cambiar and Walden is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Cambiar Smid Fund and Walden Midcap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walden Midcap and Cambiar Smid 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 Cambiar Smid Fund are associated (or correlated) with Walden Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walden Midcap has no effect on the direction of Cambiar Smid i.e., Cambiar Smid and Walden Midcap go up and down completely randomly.

Pair Corralation between Cambiar Smid and Walden Midcap

Assuming the 90 days horizon Cambiar Smid is expected to generate 2.09 times less return on investment than Walden Midcap. In addition to that, Cambiar Smid is 1.21 times more volatile than Walden Midcap Fund. It trades about 0.14 of its total potential returns per unit of risk. Walden Midcap Fund is currently generating about 0.36 per unit of volatility. If you would invest  2,367  in Walden Midcap Fund on September 4, 2024 and sell it today you would earn a total of  155.00  from holding Walden Midcap Fund or generate 6.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Cambiar Smid Fund  vs.  Walden Midcap Fund

Cambiar Smid

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cambiar Smid Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Cambiar Smid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Walden Midcap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walden Midcap Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Walden Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Cambiar Smid and Walden Midcap

The main advantage of trading using opposite Cambiar Smid and Walden Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambiar Smid position performs unexpectedly, Walden Midcap 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 Walden Midcap will offset losses from the drop in Walden Midcap's long position.

The idea behind Cambiar Smid Fund and Walden Midcap Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .