Correlation Between Champlain Mid and Total Return

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

Diversification Opportunities for Champlain Mid and Total Return

0.34

Correlation Coefficient

Champlain Mid  Total Return

Weak diversification

The 3 months correlation between Champlain and Total is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Total Return Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return has no effect on the direction of Champlain Mid i.e., Champlain Mid and Total Return go up and down completely randomly.

Pair Corralation between Champlain Mid and Total Return

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Total Return. In addition to that, Champlain Mid is 4.46 times more volatile than Total Return Fund. It trades about -0.14 of its total potential returns per unit of risk. Total Return Fund is currently generating about 0.06 per unit of volatility. If you would invest  860.00  in Total Return Fund on December 2, 2024 and sell it today you would earn a total of  11.00  from holding Total Return Fund or generate 1.28% return on investment over 90 days.

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

Champlain Mid Cap  vs.  Total Return Fund

Champlain Mid Cap

Risk-Adjusted Performance

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 weak performance in the last few months, the Fund's primary indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Total Return

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Total Return Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Total Return 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 Total Return

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

The idea behind Champlain Mid Cap and Total Return Fund 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.