Correlation Between Financial Industries and Chartwell Small
Can any of the company-specific risk be diversified away by investing in both Financial Industries 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 Financial Industries and Chartwell Small 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 Chartwell Small Cap, you can compare the effects of market volatilities on Financial Industries 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 Financial Industries with a short position of Chartwell Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial Industries and Chartwell Small.
Diversification Opportunities for Financial Industries and Chartwell Small
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Financial and Chartwell is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Financial Industries Fund 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 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 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 Financial Industries i.e., Financial Industries and Chartwell Small go up and down completely randomly.
Pair Corralation between Financial Industries and Chartwell Small
Assuming the 90 days horizon Financial Industries is expected to generate 1.25 times less return on investment than Chartwell Small. But when comparing it to its historical volatility, Financial Industries Fund is 1.4 times less risky than Chartwell Small. It trades about 0.23 of its potential returns per unit of risk. Chartwell Small Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,221 in Chartwell Small Cap on April 12, 2025 and sell it today you would earn a total of 220.00 from holding Chartwell Small Cap or generate 18.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Financial Industries Fund vs. Chartwell Small Cap
Performance |
| Timeline |
| Financial Industries |
| Chartwell Small Cap |
Financial Industries and Chartwell Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Financial Industries and Chartwell Small
The main advantage of trading using opposite Financial Industries and Chartwell Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financial Industries 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.| Financial Industries vs. Vy Goldman Sachs | Financial Industries vs. Sprott Gold Equity | Financial Industries vs. Goldman Sachs Real | Financial Industries vs. The Gold Bullion |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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