Correlation Between Champlain Mid and Blackrock Large

Can any of the company-specific risk be diversified away by investing in both Champlain Mid and Blackrock Large 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 Mid and Blackrock Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champlain Mid Cap and Blackrock Large Cap, you can compare the effects of market volatilities on Champlain Mid and Blackrock Large 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 Mid with a short position of Blackrock Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Mid and Blackrock Large.

Diversification Opportunities for Champlain Mid and Blackrock Large

0.77

Correlation Coefficient

Champlain Mid  Blackrock Large

Poor diversification

The 3 months correlation between Champlain and Blackrock is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Blackrock Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Large Cap and Champlain Mid 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 Mid Cap are associated (or correlated) with Blackrock Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Large Cap has no effect on the direction of Champlain Mid i.e., Champlain Mid and Blackrock Large go up and down completely randomly.

Pair Corralation between Champlain Mid and Blackrock Large

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Blackrock Large. In addition to that, Champlain Mid is 2.11 times more volatile than Blackrock Large Cap. It trades about -0.23 of its total potential returns per unit of risk. Blackrock Large Cap is currently generating about 0.07 per unit of volatility. If you would invest  874.00  in Blackrock Large Cap on September 24, 2024 and sell it today you would earn a total of  12.00  from holding Blackrock Large Cap or generate 1.37% return on investment over 90 days.

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

Champlain Mid Cap  vs.  Blackrock Large Cap

Champlain Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Champlain Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Champlain Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Blackrock Large Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Large Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Blackrock Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Champlain Mid and Blackrock Large

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

The idea behind Champlain Mid Cap and Blackrock Large Cap 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.