Correlation Between Walden Midcap and Champlain Mid

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

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

Diversification Opportunities for Walden Midcap and Champlain Mid

0.98

Correlation Coefficient

Walden Midcap  Champlain Mid

Almost no diversification

The 3 months correlation between Walden and Champlain is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Walden Midcap Fund and Champlain Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Mid Cap and Walden Midcap 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 Walden Midcap Fund are associated (or correlated) with Champlain Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Mid Cap has no effect on the direction of Walden Midcap i.e., Walden Midcap and Champlain Mid go up and down completely randomly.

Pair Corralation between Walden Midcap and Champlain Mid

Assuming the 90 days horizon Walden Midcap is expected to generate 1.32 times less return on investment than Champlain Mid. But when comparing it to its historical volatility, Walden Midcap Fund is 1.21 times less risky than Champlain Mid. It trades about 0.17 of its potential returns per unit of risk. Champlain Mid Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,362  in Champlain Mid Cap on September 12, 2024 and sell it today you would earn a total of  243.00  from holding Champlain Mid Cap or generate 10.29% return on investment over 90 days.

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

Walden Midcap Fund  vs.  Champlain Mid Cap

Walden Midcap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Walden Midcap Fund are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Walden Midcap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Champlain Mid Cap

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Mid Cap are ranked lower than 15 (%) 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.

Pair Trading with Walden Midcap and Champlain Mid

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

The idea behind Walden Midcap Fund and Champlain 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.