Correlation Between Us Small and Carillon Chartwell

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

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

Diversification Opportunities for Us Small and Carillon Chartwell

0.32

Correlation Coefficient

Us Small  Carillon Chartwell

Weak diversification

The 3 months correlation between DFSVX and Carillon is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Us Small Cap and Carillon Chartwell Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Chartwell Small and Us 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 Us Small Cap are associated (or correlated) with Carillon Chartwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Chartwell Small has no effect on the direction of Us Small i.e., Us Small and Carillon Chartwell go up and down completely randomly.

Pair Corralation between Us Small and Carillon Chartwell

Assuming the 90 days horizon Us Small Cap is expected to generate 0.28 times more return on investment than Carillon Chartwell. However, Us Small Cap is 3.63 times less risky than Carillon Chartwell. It trades about -0.11 of its potential returns per unit of risk. Carillon Chartwell Small is currently generating about -0.16 per unit of risk. If you would invest  4,833  in Us Small Cap on December 22, 2024 and sell it today you would lose (344.00) from holding Us Small Cap or give up 7.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Us Small Cap  vs.  Carillon Chartwell Small

Us Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Small Cap 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.

Carillon Chartwell Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Carillon Chartwell Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Us Small and Carillon Chartwell

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

The idea behind Us Small Cap and Carillon Chartwell 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.