Correlation Between Tactical Multi and Chartwell Short

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

By analyzing existing cross correlation between Tactical Multi Purpose Fund and Chartwell Short Duration, you can compare the effects of market volatilities on Tactical Multi and Chartwell Short 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 Tactical Multi with a short position of Chartwell Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tactical Multi and Chartwell Short.

Diversification Opportunities for Tactical Multi and Chartwell Short

0.83

Correlation Coefficient

Tactical Multi  Chartwell Short

Very poor diversification

The 3 months correlation between Tactical and Chartwell is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Tactical Multi Purpose Fund and Chartwell Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Short Duration and Tactical Multi 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 Tactical Multi Purpose Fund are associated (or correlated) with Chartwell Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Short Duration has no effect on the direction of Tactical Multi i.e., Tactical Multi and Chartwell Short go up and down completely randomly.

Pair Corralation between Tactical Multi and Chartwell Short

Assuming the 90 days horizon Tactical Multi is expected to generate 1.09 times less return on investment than Chartwell Short. But when comparing it to its historical volatility, Tactical Multi Purpose Fund is 4.48 times less risky than Chartwell Short. It trades about 0.39 of its potential returns per unit of risk. Chartwell Short Duration is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  963.00  in Chartwell Short Duration on January 20, 2024 and sell it today you would earn a total of  3.00  from holding Chartwell Short Duration or generate 0.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Tactical Multi Purpose Fund  vs.  Chartwell Short Duration

Tactical Multi Purpose

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Tactical Multi Purpose Fund are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Tactical Multi is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chartwell Short Duration

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Short Duration are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Chartwell Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tactical Multi and Chartwell Short

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

The idea behind Tactical Multi Purpose Fund and Chartwell Short Duration 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 Global Correlations module to find global opportunities by holding instruments from different markets.