Correlation Between Vanguard Explorer and Carillon Chartwell

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

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

Diversification Opportunities for Vanguard Explorer and Carillon Chartwell

0.92

Correlation Coefficient

Vanguard Explorer  Carillon Chartwell

Almost no diversification

The 3 months correlation between Vanguard and Carillon is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Explorer Fund 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 Vanguard Explorer 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 Vanguard Explorer Fund 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 Vanguard Explorer i.e., Vanguard Explorer and Carillon Chartwell go up and down completely randomly.

Pair Corralation between Vanguard Explorer and Carillon Chartwell

Assuming the 90 days horizon Vanguard Explorer Fund is expected to under-perform the Carillon Chartwell. But the mutual fund apears to be less risky and, when comparing its historical volatility, Vanguard Explorer Fund is 1.03 times less risky than Carillon Chartwell. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Carillon Chartwell Small is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,710  in Carillon Chartwell Small on October 24, 2024 and sell it today you would earn a total of  77.00  from holding Carillon Chartwell Small or generate 4.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Vanguard Explorer Fund  vs.  Carillon Chartwell Small

Vanguard Explorer

Risk-Adjusted Performance

0 of 100

Very Weak

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

Carillon Chartwell Small

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Chartwell Small are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Carillon Chartwell is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Explorer and Carillon Chartwell

The main advantage of trading using opposite Vanguard Explorer and Carillon Chartwell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Explorer 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 Vanguard Explorer Fund 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.