Correlation Between Carillon Chartwell and Vanguard High-yield

Can any of the company-specific risk be diversified away by investing in both Carillon Chartwell and Vanguard High-yield 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 Carillon Chartwell and Vanguard High-yield into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carillon Chartwell Short and Vanguard High Yield Porate, you can compare the effects of market volatilities on Carillon Chartwell and Vanguard High-yield 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 Carillon Chartwell with a short position of Vanguard High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carillon Chartwell and Vanguard High-yield.

Diversification Opportunities for Carillon Chartwell and Vanguard High-yield

0.73

Correlation Coefficient

Carillon Chartwell  Vanguard High-yield

Poor diversification

The 3 months correlation between Carillon and Vanguard is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Carillon Chartwell Short and Vanguard High Yield Porate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard High Yield and Carillon Chartwell 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 Carillon Chartwell Short are associated (or correlated) with Vanguard High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard High Yield has no effect on the direction of Carillon Chartwell i.e., Carillon Chartwell and Vanguard High-yield go up and down completely randomly.

Pair Corralation between Carillon Chartwell and Vanguard High-yield

Assuming the 90 days horizon Carillon Chartwell is expected to generate 1.63 times less return on investment than Vanguard High-yield. But when comparing it to its historical volatility, Carillon Chartwell Short is 2.61 times less risky than Vanguard High-yield. It trades about 0.21 of its potential returns per unit of risk. Vanguard High Yield Porate is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  461.00  in Vanguard High Yield Porate on October 5, 2024 and sell it today you would earn a total of  82.00  from holding Vanguard High Yield Porate or generate 17.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	38.11%
Values	Daily Returns

Carillon Chartwell Short  vs.  Vanguard High Yield Porate

Carillon Chartwell Short

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vanguard High Yield

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Carillon Chartwell and Vanguard High-yield

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

The idea behind Carillon Chartwell Short and Vanguard High Yield Porate 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.