Correlation Between Champlain Mid and Victory Integrity

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

Diversification Opportunities for Champlain Mid and Victory Integrity

0.75

Correlation Coefficient

Champlain Mid  Victory Integrity

Poor diversification

The 3 months correlation between Champlain and Victory is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Victory Integrity Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victory Integrity Mid 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 Victory Integrity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victory Integrity Mid has no effect on the direction of Champlain Mid i.e., Champlain Mid and Victory Integrity go up and down completely randomly.

Pair Corralation between Champlain Mid and Victory Integrity

Assuming the 90 days horizon Champlain Mid Cap is expected to generate 0.88 times more return on investment than Victory Integrity. However, Champlain Mid Cap is 1.14 times less risky than Victory Integrity. It trades about 0.01 of its potential returns per unit of risk. Victory Integrity Mid Cap is currently generating about 0.0 per unit of risk. If you would invest  2,307  in Champlain Mid Cap on October 7, 2024 and sell it today you would lose (3.00) from holding Champlain Mid Cap or give up 0.13% of portfolio value over 90 days.

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

Champlain Mid Cap  vs.  Victory Integrity Mid Cap

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.

Victory Integrity Mid

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory Integrity Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Champlain Mid and Victory Integrity

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

The idea behind Champlain Mid Cap and Victory Integrity 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.