Correlation Between Chestnut Street and Equity Growth
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Equity Growth 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 Chestnut Street and Equity Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chestnut Street Exchange and Equity Growth Fund, you can compare the effects of market volatilities on Chestnut Street and Equity Growth 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 Chestnut Street with a short position of Equity Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Equity Growth.
Diversification Opportunities for Chestnut Street and Equity Growth
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chestnut and Equity is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Equity Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Growth and Chestnut Street 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 Chestnut Street Exchange are associated (or correlated) with Equity Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Growth has no effect on the direction of Chestnut Street i.e., Chestnut Street and Equity Growth go up and down completely randomly.
Pair Corralation between Chestnut Street and Equity Growth
Assuming the 90 days horizon Chestnut Street Exchange is expected to under-perform the Equity Growth. But the mutual fund apears to be less risky and, when comparing its historical volatility, Chestnut Street Exchange is 1.24 times less risky than Equity Growth. The mutual fund trades about -0.21 of its potential returns per unit of risk. The Equity Growth Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 3,416 in Equity Growth Fund on September 23, 2024 and sell it today you would lose (16.00) from holding Equity Growth Fund or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Equity Growth Fund
Performance |
| Timeline |
| Chestnut Street Exchange |
| Equity Growth |
Chestnut Street and Equity Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Equity Growth
The main advantage of trading using opposite Chestnut Street and Equity Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Equity Growth 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 Equity Growth will offset losses from the drop in Equity Growth's long position.| Chestnut Street vs. Vanguard Total Stock | Chestnut Street vs. Vanguard 500 Index | Chestnut Street vs. Vanguard Total Stock | Chestnut Street vs. Vanguard Total Stock |
| Equity Growth vs. Franklin Government Money | Equity Growth vs. Schwab Treasury Money | Equity Growth vs. General Money Market | Equity Growth vs. Chestnut Street Exchange |
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 Stocks Directory module to find actively traded stocks across global markets.
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