Correlation Between Champlain Small and Blackrock

Can any of the company-specific risk be diversified away by investing in both Champlain Small and Blackrock 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 Small and Blackrock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Champlain Small and Blackrock Government Bond, you can compare the effects of market volatilities on Champlain Small and Blackrock 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 Small with a short position of Blackrock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Blackrock.

Diversification Opportunities for Champlain Small and Blackrock

-0.47

Correlation Coefficient

Champlain Small  Blackrock

Very good diversification

The 3 months correlation between Champlain and Blackrock is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Blackrock Government Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock Government Bond and Champlain Small 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 Small are associated (or correlated) with Blackrock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock Government Bond has no effect on the direction of Champlain Small i.e., Champlain Small and Blackrock go up and down completely randomly.

Pair Corralation between Champlain Small and Blackrock

Assuming the 90 days horizon Champlain Small is expected to under-perform the Blackrock. In addition to that, Champlain Small is 3.33 times more volatile than Blackrock Government Bond. It trades about -0.1 of its total potential returns per unit of risk. Blackrock Government Bond is currently generating about 0.17 per unit of volatility. If you would invest  885.00  in Blackrock Government Bond on December 23, 2024 and sell it today you would earn a total of  29.00  from holding Blackrock Government Bond or generate 3.28% return on investment over 90 days.

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

Champlain Small  vs.  Blackrock Government Bond

Champlain Small

Risk-Adjusted Performance

Very Weak

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

Blackrock Government Bond

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Blackrock Government Bond are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Blackrock 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 Small and Blackrock

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

The idea behind Champlain Small and Blackrock Government Bond 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.