Correlation Between Chartwell Small and Carillon Scout

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

By analyzing existing cross correlation between Chartwell Small Cap and Carillon Scout Small, you can compare the effects of market volatilities on Chartwell Small and Carillon Scout 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 Chartwell Small with a short position of Carillon Scout. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chartwell Small and Carillon Scout.

Diversification Opportunities for Chartwell Small and Carillon Scout

0.96

Correlation Coefficient

Chartwell Small  Carillon Scout

Almost no diversification

The 3 months correlation between Chartwell and Carillon is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Chartwell Small Cap and Carillon Scout Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Scout Small and Chartwell 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 Chartwell Small Cap are associated (or correlated) with Carillon Scout. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Scout Small has no effect on the direction of Chartwell Small i.e., Chartwell Small and Carillon Scout go up and down completely randomly.

Pair Corralation between Chartwell Small and Carillon Scout

Assuming the 90 days horizon Chartwell Small Cap is expected to generate 0.92 times more return on investment than Carillon Scout. However, Chartwell Small Cap is 1.09 times less risky than Carillon Scout. It trades about -0.16 of its potential returns per unit of risk. Carillon Scout Small is currently generating about -0.2 per unit of risk. If you would invest  1,789  in Chartwell Small Cap on November 19, 2024 and sell it today you would lose (89.00) from holding Chartwell Small Cap or give up 4.97% of portfolio value over 90 days.

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

Chartwell Small Cap  vs.  Carillon Scout Small

Chartwell Small Cap

Risk-Adjusted Performance

Very Weak

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

Carillon Scout Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carillon Scout Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward-looking 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 Chartwell Small and Carillon Scout

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

The idea behind Chartwell Small Cap and Carillon Scout Small 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.