Correlation Between Champlain Small and Virtus Bond

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

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

Diversification Opportunities for Champlain Small and Virtus Bond

-0.55

Correlation Coefficient

Champlain Small  Virtus Bond

Excellent diversification

The 3 months correlation between Champlain and Virtus is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Virtus Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Bond Fund 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 Virtus Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Bond Fund has no effect on the direction of Champlain Small i.e., Champlain Small and Virtus Bond go up and down completely randomly.

Pair Corralation between Champlain Small and Virtus Bond

Assuming the 90 days horizon Champlain Small is expected to under-perform the Virtus Bond. In addition to that, Champlain Small is 4.34 times more volatile than Virtus Bond Fund. It trades about -0.09 of its total potential returns per unit of risk. Virtus Bond Fund is currently generating about 0.09 per unit of volatility. If you would invest  985.00  in Virtus Bond Fund on December 30, 2024 and sell it today you would earn a total of  15.00  from holding Virtus Bond Fund or generate 1.52% 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.  Virtus Bond Fund

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.

Virtus Bond Fund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Bond Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Virtus Bond 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 Virtus Bond

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

The idea behind Champlain Small and Virtus Bond Fund 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.