Correlation Between Chestnut Street and Elfun Trusts
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Elfun Trusts 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 Elfun Trusts 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 Elfun Trusts Elfun, you can compare the effects of market volatilities on Chestnut Street and Elfun Trusts 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 Elfun Trusts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Elfun Trusts.
Diversification Opportunities for Chestnut Street and Elfun Trusts
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chestnut and Elfun is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Elfun Trusts Elfun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Trusts Elfun 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 Elfun Trusts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Trusts Elfun has no effect on the direction of Chestnut Street i.e., Chestnut Street and Elfun Trusts go up and down completely randomly.
Pair Corralation between Chestnut Street and Elfun Trusts
Assuming the 90 days horizon Chestnut Street is expected to generate 1.8 times less return on investment than Elfun Trusts. But when comparing it to its historical volatility, Chestnut Street Exchange is 1.26 times less risky than Elfun Trusts. It trades about 0.1 of its potential returns per unit of risk. Elfun Trusts Elfun is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 6,142 in Elfun Trusts Elfun on September 25, 2024 and sell it today you would earn a total of 3,733 from holding Elfun Trusts Elfun or generate 60.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Elfun Trusts Elfun
Performance |
| Timeline |
| Chestnut Street Exchange |
| Elfun Trusts Elfun |
Chestnut Street and Elfun Trusts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Elfun Trusts
The main advantage of trading using opposite Chestnut Street and Elfun Trusts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Elfun Trusts 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 Elfun Trusts will offset losses from the drop in Elfun Trusts' long position.| Chestnut Street vs. Iaadx | Chestnut Street vs. Leggmason Partners Institutional | Chestnut Street vs. Volumetric Fund Volumetric | Chestnut Street vs. Fa 529 Aggressive |
| Elfun Trusts vs. Dws Government Money | Elfun Trusts vs. Ab Government Exchange | Elfun Trusts vs. John Hancock Money | Elfun Trusts vs. Hewitt Money Market |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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