Correlation Between Scout Small and Carillon Scout

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

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

Diversification Opportunities for Scout Small and Carillon Scout

0.62

Correlation Coefficient

Scout Small  Carillon Scout

Poor diversification

The 3 months correlation between Scout and Carillon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Scout Small Cap 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 Scout 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 Scout Small Cap 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 Scout Small i.e., Scout Small and Carillon Scout go up and down completely randomly.

Pair Corralation between Scout Small and Carillon Scout

Assuming the 90 days horizon Scout Small is expected to generate 1.03 times less return on investment than Carillon Scout. But when comparing it to its historical volatility, Scout Small Cap is 1.0 times less risky than Carillon Scout. It trades about 0.2 of its potential returns per unit of risk. Carillon Scout Small is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  2,581  in Carillon Scout Small on May 1, 2025 and sell it today you would earn a total of  381.00  from holding Carillon Scout Small or generate 14.76% return on investment over 90 days.

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

Scout Small Cap  vs.  Carillon Scout Small

Scout Small Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Scout Small Cap are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Scout Small showed solid returns over the last few months and may actually be approaching a breakup point.

Carillon Scout Small

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Carillon Scout Small are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Carillon Scout showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Scout Small and Carillon Scout

The main advantage of trading using opposite Scout Small and Carillon Scout positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scout Small 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 Scout Small Cap 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.