Correlation Between Financial Industries and Carillon Scout

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

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

Diversification Opportunities for Financial Industries and Carillon Scout

0.76

Correlation Coefficient

Financial Industries  Carillon Scout

Poor diversification

The 3 months correlation between Financial and Carillon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund 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 Financial Industries 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 Financial Industries Fund 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 Financial Industries i.e., Financial Industries and Carillon Scout go up and down completely randomly.

Pair Corralation between Financial Industries and Carillon Scout

Assuming the 90 days horizon Financial Industries Fund is expected to under-perform the Carillon Scout. But the mutual fund apears to be less risky and, when comparing its historical volatility, Financial Industries Fund is 1.22 times less risky than Carillon Scout. The mutual fund trades about 0.0 of its potential returns per unit of risk. The Carillon Scout Small is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,995  in Carillon Scout Small on May 11, 2025 and sell it today you would lose (57.00) from holding Carillon Scout Small or give up 1.9% of portfolio value over 90 days.

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

Financial Industries Fund  vs.  Carillon Scout Small

Financial Industries

Risk-Adjusted Performance

Weakest

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

Carillon Scout Small

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Scout Small are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Carillon Scout may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Financial Industries and Carillon Scout

The main advantage of trading using opposite Financial Industries and Carillon Scout positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries 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 Financial Industries Fund 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.

Check out your portfolio center.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.