Correlation Between Champlain Mid and Monthly Rebalance

Can any of the company-specific risk be diversified away by investing in both Champlain Mid and Monthly Rebalance 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 Monthly Rebalance 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 Monthly Rebalance Nasdaq 100, you can compare the effects of market volatilities on Champlain Mid and Monthly Rebalance 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 Monthly Rebalance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Mid and Monthly Rebalance.

Diversification Opportunities for Champlain Mid and Monthly Rebalance

0.78

Correlation Coefficient

Champlain Mid  Monthly Rebalance

Poor diversification

The 3 months correlation between Champlain and Monthly is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Monthly Rebalance Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monthly Rebalance 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 Monthly Rebalance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monthly Rebalance has no effect on the direction of Champlain Mid i.e., Champlain Mid and Monthly Rebalance go up and down completely randomly.

Pair Corralation between Champlain Mid and Monthly Rebalance

Assuming the 90 days horizon Champlain Mid is expected to generate 3.6 times less return on investment than Monthly Rebalance. But when comparing it to its historical volatility, Champlain Mid Cap is 6.0 times less risky than Monthly Rebalance. It trades about 0.15 of its potential returns per unit of risk. Monthly Rebalance Nasdaq 100 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  50,627  in Monthly Rebalance Nasdaq 100 on September 18, 2024 and sell it today you would earn a total of  12,293  from holding Monthly Rebalance Nasdaq 100 or generate 24.28% 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.  Monthly Rebalance Nasdaq 100

Champlain Mid Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Mid Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Champlain Mid may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Monthly Rebalance

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monthly Rebalance Nasdaq 100 are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Monthly Rebalance showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Champlain Mid and Monthly Rebalance

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

The idea behind Champlain Mid Cap and Monthly Rebalance Nasdaq 100 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.