Correlation Between Champlain Small and Fsultx

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

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

Diversification Opportunities for Champlain Small and Fsultx

0.07

Correlation Coefficient

Champlain Small  Fsultx

Significant diversification

The 3 months correlation between Champlain and Fsultx is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Champlain Small and Fsultx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fsultx and Champlain Small 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 Champlain Small are associated (or correlated) with Fsultx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fsultx has no effect on the direction of Champlain Small i.e., Champlain Small and Fsultx go up and down completely randomly.

Pair Corralation between Champlain Small and Fsultx

Assuming the 90 days horizon Champlain Small is expected to generate 6.72 times more return on investment than Fsultx. However, Champlain Small is 6.72 times more volatile than Fsultx. It trades about 0.24 of its potential returns per unit of risk. Fsultx is currently generating about 0.06 per unit of risk. If you would invest  1,866  in Champlain Small on February 7, 2025 and sell it today you would earn a total of  237.00  from holding Champlain Small or generate 12.7% return on investment over 90 days.

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

Champlain Small  vs.  Fsultx

Champlain Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Champlain Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Fsultx

Risk-Adjusted Performance

Weak

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

Pair Trading with Champlain Small and Fsultx

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

The idea behind Champlain Small and Fsultx 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.