Correlation Between Champlain Mid and Columbia Mid

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

Diversification Opportunities for Champlain Mid and Columbia Mid

0.75

Correlation Coefficient

Champlain Mid  Columbia Mid

Poor diversification

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

Pair Corralation between Champlain Mid and Columbia Mid

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Columbia Mid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Champlain Mid Cap is 1.04 times less risky than Columbia Mid. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Columbia Mid Cap is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,453  in Columbia Mid Cap on October 7, 2024 and sell it today you would earn a total of  24.00  from holding Columbia Mid Cap or generate 1.65% return on investment over 90 days.

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

Champlain Mid Cap  vs.  Columbia 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.

Columbia Mid Cap

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Columbia Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Columbia 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 Champlain Mid and Columbia Mid

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

The idea behind Champlain Mid Cap and Columbia 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.