Correlation Between Champlain Small and Lifex Inflation

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

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

Diversification Opportunities for Champlain Small and Lifex Inflation

-0.85

Correlation Coefficient

Champlain Small  Lifex Inflation

Pay attention - limited upside

The 3 months correlation between Champlain and Lifex is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation Prot 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 Lifex Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation Prot has no effect on the direction of Champlain Small i.e., Champlain Small and Lifex Inflation go up and down completely randomly.

Pair Corralation between Champlain Small and Lifex Inflation

Assuming the 90 days horizon Champlain Small is expected to generate 2.44 times more return on investment than Lifex Inflation. However, Champlain Small is 2.44 times more volatile than Lifex Inflation Protected Income. It trades about 0.15 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about -0.28 per unit of risk. If you would invest  2,285  in Champlain Small on September 16, 2024 and sell it today you would earn a total of  266.00  from holding Champlain Small or generate 11.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	70.77%
Values	Daily Returns

Champlain Small  vs.  Lifex Inflation Protected Inco

Champlain Small

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Small are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Champlain Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lifex Inflation Prot

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Champlain Small and Lifex Inflation

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

The idea behind Champlain Small and Lifex Inflation Protected Income 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.