Correlation Between Champlain Small and Nationwide Bny

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

By analyzing existing cross correlation between Champlain Small and Nationwide Bny Mellon, you can compare the effects of market volatilities on Champlain Small and Nationwide Bny 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 Nationwide Bny. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Nationwide Bny.

Diversification Opportunities for Champlain Small and Nationwide Bny

0.88

Correlation Coefficient

Champlain Small  Nationwide Bny

Very poor diversification

The 3 months correlation between Champlain and Nationwide is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Nationwide Bny Mellon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Bny Mellon 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 Nationwide Bny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Bny Mellon has no effect on the direction of Champlain Small i.e., Champlain Small and Nationwide Bny go up and down completely randomly.

Pair Corralation between Champlain Small and Nationwide Bny

Assuming the 90 days horizon Champlain Small is expected to generate 1.71 times more return on investment than Nationwide Bny. However, Champlain Small is 1.71 times more volatile than Nationwide Bny Mellon. It trades about 0.17 of its potential returns per unit of risk. Nationwide Bny Mellon is currently generating about 0.1 per unit of risk. If you would invest  2,271  in Champlain Small on September 13, 2024 and sell it today you would earn a total of  303.00  from holding Champlain Small or generate 13.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Champlain Small  vs.  Nationwide Bny Mellon

Champlain Small

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Small are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Champlain Small showed solid returns over the last few months and may actually be approaching a breakup point.

Nationwide Bny Mellon

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nationwide Bny Mellon are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Nationwide Bny 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 Small and Nationwide Bny

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

The idea behind Champlain Small and Nationwide Bny Mellon 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.