Correlation Between Carillon Chartwell and Scout Mid

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

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

Diversification Opportunities for Carillon Chartwell and Scout Mid

0.8

Correlation Coefficient

Carillon Chartwell  Scout Mid

Very poor diversification

The 3 months correlation between Carillon and Scout is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Carillon Chartwell Short and Scout Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scout Mid Cap and Carillon Chartwell 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 Carillon Chartwell Short are associated (or correlated) with Scout Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scout Mid Cap has no effect on the direction of Carillon Chartwell i.e., Carillon Chartwell and Scout Mid go up and down completely randomly.

Pair Corralation between Carillon Chartwell and Scout Mid

Assuming the 90 days horizon Carillon Chartwell Short is expected to generate 0.12 times more return on investment than Scout Mid. However, Carillon Chartwell Short is 8.2 times less risky than Scout Mid. It trades about -0.21 of its potential returns per unit of risk. Scout Mid Cap is currently generating about -0.3 per unit of risk. If you would invest  956.00  in Carillon Chartwell Short on September 24, 2024 and sell it today you would lose (5.00) from holding Carillon Chartwell Short or give up 0.52% of portfolio value over 90 days.

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

Carillon Chartwell Short  vs.  Scout Mid Cap

Carillon Chartwell Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Scout Mid Cap

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Carillon Chartwell and Scout Mid

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

The idea behind Carillon Chartwell Short and Scout Mid 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.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.