Correlation Between Champlain Mid and Free Market

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

Diversification Opportunities for Champlain Mid and Free Market

0.87

Correlation Coefficient

Champlain Mid  Free Market

Very poor diversification

The 3 months correlation between Champlain and Free is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Free Market Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Free Market Equity 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 Free Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Free Market Equity has no effect on the direction of Champlain Mid i.e., Champlain Mid and Free Market go up and down completely randomly.

Pair Corralation between Champlain Mid and Free Market

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Free Market. In addition to that, Champlain Mid is 1.73 times more volatile than Free Market Equity. It trades about -0.28 of its total potential returns per unit of risk. Free Market Equity is currently generating about -0.32 per unit of volatility. If you would invest  2,622  in Free Market Equity on October 10, 2024 and sell it today you would lose (225.00) from holding Free Market Equity or give up 8.58% of portfolio value over 90 days.

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

Champlain Mid Cap  vs.  Free Market Equity

Champlain Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

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

Free Market Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Free Market Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Free Market 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 Mid and Free Market

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

The idea behind Champlain Mid Cap and Free Market Equity 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..