Correlation Between Specialized Technology and Carillon Reams

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

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

Diversification Opportunities for Specialized Technology and Carillon Reams

-0.48

Correlation Coefficient

Specialized Technology  Carillon Reams

Very good diversification

The 3 months correlation between SPECIALIZED and Carillon is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Specialized Technology Fund and Carillon Reams Unconstrained in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carillon Reams Uncon and Specialized Technology 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 Specialized Technology Fund are associated (or correlated) with Carillon Reams. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carillon Reams Uncon has no effect on the direction of Specialized Technology i.e., Specialized Technology and Carillon Reams go up and down completely randomly.

Pair Corralation between Specialized Technology and Carillon Reams

Assuming the 90 days horizon Specialized Technology Fund is expected to under-perform the Carillon Reams. In addition to that, Specialized Technology is 3.67 times more volatile than Carillon Reams Unconstrained. It trades about -0.09 of its total potential returns per unit of risk. Carillon Reams Unconstrained is currently generating about 0.17 per unit of volatility. If you would invest  1,193  in Carillon Reams Unconstrained on December 24, 2024 and sell it today you would earn a total of  38.00  from holding Carillon Reams Unconstrained or generate 3.19% return on investment over 90 days.

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

Specialized Technology Fund  vs.  Carillon Reams Unconstrained

Specialized Technology

Risk-Adjusted Performance

Very Weak

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

Carillon Reams Uncon

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Reams Unconstrained are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Carillon Reams is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Specialized Technology and Carillon Reams

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

The idea behind Specialized Technology Fund and Carillon Reams Unconstrained 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.