Correlation Between Financials Ultrasector and Chartwell Small

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

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

Diversification Opportunities for Financials Ultrasector and Chartwell Small

0.69

Correlation Coefficient

Financials Ultrasector  Chartwell Small

Poor diversification

The 3 months correlation between Financials and Chartwell is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Chartwell Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Small Cap and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Chartwell Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Small Cap has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Chartwell Small go up and down completely randomly.

Pair Corralation between Financials Ultrasector and Chartwell Small

Assuming the 90 days horizon Financials Ultrasector is expected to generate 1.12 times less return on investment than Chartwell Small. But when comparing it to its historical volatility, Financials Ultrasector Profund is 1.06 times less risky than Chartwell Small. It trades about 0.09 of its potential returns per unit of risk. Chartwell Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,299  in Chartwell Small Cap on May 7, 2025 and sell it today you would earn a total of  97.00  from holding Chartwell Small Cap or generate 7.47% return on investment over 90 days.

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

Financials Ultrasector Profund  vs.  Chartwell Small Cap

Financials Ultrasector

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Financials Ultrasector Profund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Financials Ultrasector may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Chartwell Small Cap

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Small Cap are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Chartwell Small may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Financials Ultrasector and Chartwell Small

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

The idea behind Financials Ultrasector Profund and Chartwell Small Cap 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.