Correlation Between Champlain Mid and Timothy Largemip

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

Diversification Opportunities for Champlain Mid and Timothy Largemip

0.4

Correlation Coefficient

Champlain Mid  Timothy Largemip

Very weak diversification

The 3 months correlation between Champlain and Timothy is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Mid Cap and Timothy Largemip Cap Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timothy Largemip 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 Timothy Largemip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timothy Largemip Cap has no effect on the direction of Champlain Mid i.e., Champlain Mid and Timothy Largemip go up and down completely randomly.

Pair Corralation between Champlain Mid and Timothy Largemip

Assuming the 90 days horizon Champlain Mid Cap is expected to under-perform the Timothy Largemip. In addition to that, Champlain Mid is 1.15 times more volatile than Timothy Largemip Cap Growth. It trades about -0.18 of its total potential returns per unit of risk. Timothy Largemip Cap Growth is currently generating about -0.16 per unit of volatility. If you would invest  1,483  in Timothy Largemip Cap Growth on December 4, 2024 and sell it today you would lose (191.00) from holding Timothy Largemip Cap Growth or give up 12.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Champlain Mid Cap  vs.  Timothy Largemip Cap Growth

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.

Timothy Largemip Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Timothy Largemip Cap Growth 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 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.

Pair Trading with Champlain Mid and Timothy Largemip

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

The idea behind Champlain Mid Cap and Timothy Largemip Cap Growth 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.