Correlation Between Locorr Spectrum and Champlain Small

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

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

Diversification Opportunities for Locorr Spectrum and Champlain Small

0.08

Correlation Coefficient

Locorr Spectrum  Champlain Small

Significant diversification

The 3 months correlation between Locorr and Champlain is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Locorr Spectrum Income and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small and Locorr Spectrum 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 Locorr Spectrum Income are associated (or correlated) with Champlain Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Small has no effect on the direction of Locorr Spectrum i.e., Locorr Spectrum and Champlain Small go up and down completely randomly.

Pair Corralation between Locorr Spectrum and Champlain Small

Assuming the 90 days horizon Locorr Spectrum Income is expected to under-perform the Champlain Small. But the mutual fund apears to be less risky and, when comparing its historical volatility, Locorr Spectrum Income is 2.9 times less risky than Champlain Small. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Champlain Small is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,285  in Champlain Small on September 14, 2024 and sell it today you would earn a total of  283.00  from holding Champlain Small or generate 12.39% return on investment over 90 days.

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

Locorr Spectrum Income  vs.  Champlain Small

Locorr Spectrum Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Champlain Small

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Small are ranked lower than 12 (%) 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.

Pair Trading with Locorr Spectrum and Champlain Small

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

The idea behind Locorr Spectrum Income and Champlain 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.