Correlation Between Scout Mid and Carillon Scout

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

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

Diversification Opportunities for Scout Mid and Carillon Scout

0.95

Correlation Coefficient

Scout Mid  Carillon Scout

Almost no diversification

The 3 months correlation between SCOUT and Carillon is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Scout Mid 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 Scout Mid 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 Scout Mid 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 Scout Mid i.e., Scout Mid and Carillon Scout go up and down completely randomly.

Pair Corralation between Scout Mid and Carillon Scout

Assuming the 90 days horizon Scout Mid Cap is expected to generate 1.03 times more return on investment than Carillon Scout. However, Scout Mid is 1.03 times more volatile than Carillon Scout Small. It trades about -0.15 of its potential returns per unit of risk. Carillon Scout Small is currently generating about -0.19 per unit of risk. If you would invest  2,851  in Scout Mid Cap on November 28, 2024 and sell it today you would lose (479.00) from holding Scout Mid Cap or give up 16.8% of portfolio value over 90 days.

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

Scout Mid Cap  vs.  Carillon Scout Small

Scout Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scout Mid Cap 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 primary indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing 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 weak performance in the last few months, the Fund's forward-looking indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Scout Mid and Carillon Scout

The main advantage of trading using opposite Scout Mid and Carillon Scout positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout Mid 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 Scout Mid 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.