Correlation Between Champlain Small and Barings Active

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

By analyzing existing cross correlation between Champlain Small and Barings Active Short, you can compare the effects of market volatilities on Champlain Small and Barings Active 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 Barings Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Champlain Small and Barings Active.

Diversification Opportunities for Champlain Small and Barings Active

-0.47

Correlation Coefficient

Champlain Small  Barings Active

Very good diversification

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

Pair Corralation between Champlain Small and Barings Active

Assuming the 90 days horizon Champlain Small is expected to generate 1.01 times less return on investment than Barings Active. In addition to that, Champlain Small is 8.21 times more volatile than Barings Active Short. It trades about 0.02 of its total potential returns per unit of risk. Barings Active Short is currently generating about 0.2 per unit of volatility. If you would invest  808.00  in Barings Active Short on December 4, 2024 and sell it today you would earn a total of  123.00  from holding Barings Active Short or generate 15.22% 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.  Barings Active Short

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 weak performance in the last few months, the Fund's basic 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.

Barings Active Short

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Barings Active Short are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Barings Active 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 Barings Active

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

The idea behind Champlain Small and Barings Active Short 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.