Correlation Between Champlain Small and Pimco Mortgage

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

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

Diversification Opportunities for Champlain Small and Pimco Mortgage

-0.38

Correlation Coefficient

Champlain Small  Pimco Mortgage

Very good diversification

The 3 months correlation between Champlain and Pimco is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Pimco Mortgage Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Mortgage Oppor 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 Pimco Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Mortgage Oppor has no effect on the direction of Champlain Small i.e., Champlain Small and Pimco Mortgage go up and down completely randomly.

Pair Corralation between Champlain Small and Pimco Mortgage

Assuming the 90 days horizon Champlain Small is expected to generate 8.98 times more return on investment than Pimco Mortgage. However, Champlain Small is 8.98 times more volatile than Pimco Mortgage Opportunities. It trades about -0.01 of its potential returns per unit of risk. Pimco Mortgage Opportunities is currently generating about -0.17 per unit of risk. If you would invest  2,324  in Champlain Small on September 20, 2024 and sell it today you would lose (59.00) from holding Champlain Small or give up 2.54% of portfolio value over 90 days.

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

Champlain Small  vs.  Pimco Mortgage Opportunities

Champlain Small

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pimco Mortgage Oppor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pimco Mortgage Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Pimco Mortgage 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 Pimco Mortgage

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

The idea behind Champlain Small and Pimco Mortgage Opportunities 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.