Correlation Between Schwab Fundamental and Champlain Small

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

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

Diversification Opportunities for Schwab Fundamental and Champlain Small

0.24

Correlation Coefficient

Schwab Fundamental  Champlain Small

Modest diversification

The 3 months correlation between Schwab and Champlain is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Schwab Fundamental Global and Champlain Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Small and Schwab Fundamental 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 Schwab Fundamental Global 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 Schwab Fundamental i.e., Schwab Fundamental and Champlain Small go up and down completely randomly.

Pair Corralation between Schwab Fundamental and Champlain Small

Assuming the 90 days horizon Schwab Fundamental Global is expected to generate 0.38 times more return on investment than Champlain Small. However, Schwab Fundamental Global is 2.67 times less risky than Champlain Small. It trades about -0.44 of its potential returns per unit of risk. Champlain Small is currently generating about -0.23 per unit of risk. If you would invest  994.00  in Schwab Fundamental Global on October 8, 2024 and sell it today you would lose (78.00) from holding Schwab Fundamental Global or give up 7.85% of portfolio value over 90 days.

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

Schwab Fundamental Global  vs.  Champlain Small

Schwab Fundamental Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Fundamental Global 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.

Champlain Small

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Champlain Small are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Champlain Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Schwab Fundamental and Champlain Small

The main advantage of trading using opposite Schwab Fundamental and Champlain Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schwab Fundamental 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 Schwab Fundamental Global 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.