Correlation Between Champlain Small and Dreyfus Research

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

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

Diversification Opportunities for Champlain Small and Dreyfus Research

0.84

Correlation Coefficient

Champlain Small  Dreyfus Research

Very poor diversification

The 3 months correlation between Champlain and Dreyfus is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Dreyfus Research Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Research Growth 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 Dreyfus Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Research Growth has no effect on the direction of Champlain Small i.e., Champlain Small and Dreyfus Research go up and down completely randomly.

Pair Corralation between Champlain Small and Dreyfus Research

Assuming the 90 days horizon Champlain Small is expected to under-perform the Dreyfus Research. In addition to that, Champlain Small is 1.96 times more volatile than Dreyfus Research Growth. It trades about -0.23 of its total potential returns per unit of risk. Dreyfus Research Growth is currently generating about -0.05 per unit of volatility. If you would invest  2,172  in Dreyfus Research Growth on October 9, 2024 and sell it today you would lose (30.00) from holding Dreyfus Research Growth or give up 1.38% of portfolio value over 90 days.

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

Champlain Small  vs.  Dreyfus Research Growth

Champlain Small

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Champlain Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Champlain Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dreyfus Research Growth

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Research Growth are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dreyfus Research 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 Dreyfus Research

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

The idea behind Champlain Small and Dreyfus Research 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.