Correlation Between Champlain Mid and Federated Prudent

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

Diversification Opportunities for Champlain Mid and Federated Prudent

0.0

Correlation Coefficient

Champlain Mid  Federated Prudent

Pay attention - limited upside

The 3 months correlation between Champlain and Federated is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Federated Prudent Bear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Prudent Bear 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 Federated Prudent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Prudent Bear has no effect on the direction of Champlain Mid i.e., Champlain Mid and Federated Prudent go up and down completely randomly.

Pair Corralation between Champlain Mid and Federated Prudent

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Federated Prudent. In addition to that, Champlain Mid is 1.02 times more volatile than Federated Prudent Bear. It trades about -0.28 of its total potential returns per unit of risk. Federated Prudent Bear is currently generating about -0.16 per unit of volatility. If you would invest  409.00  in Federated Prudent Bear on October 8, 2024 and sell it today you would lose (31.00) from holding Federated Prudent Bear or give up 7.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Champlain Mid Cap  vs.  Federated Prudent Bear

Champlain Mid Cap

Risk-Adjusted Performance

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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.

Federated Prudent Bear

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Federated Prudent Bear has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Champlain Mid and Federated Prudent

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

The idea behind Champlain Mid Cap and Federated Prudent Bear 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.