Correlation Between Chestnut Street and First Eagle
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and First Eagle 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 First Eagle 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 First Eagle Fund, you can compare the effects of market volatilities on Chestnut Street and First Eagle 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 First Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and First Eagle.
Diversification Opportunities for Chestnut Street and First Eagle
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chestnut and First is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and First Eagle Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Eagle Fund 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 First Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Eagle Fund has no effect on the direction of Chestnut Street i.e., Chestnut Street and First Eagle go up and down completely randomly.
Pair Corralation between Chestnut Street and First Eagle
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 0.44 times more return on investment than First Eagle. However, Chestnut Street Exchange is 2.27 times less risky than First Eagle. It trades about 0.13 of its potential returns per unit of risk. First Eagle Fund is currently generating about -0.3 per unit of risk. If you would invest 116,336 in Chestnut Street Exchange on September 12, 2024 and sell it today you would earn a total of 1,244 from holding Chestnut Street Exchange or generate 1.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. First Eagle Fund
Performance |
| Timeline |
| Chestnut Street Exchange |
| First Eagle Fund |
Chestnut Street and First Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and First Eagle
The main advantage of trading using opposite Chestnut Street and First Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, First Eagle 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 First Eagle will offset losses from the drop in First Eagle's long position.| Chestnut Street vs. Global Gold Fund | Chestnut Street vs. Gold And Precious | Chestnut Street vs. Europac Gold Fund | Chestnut Street vs. Fidelity Advisor Gold |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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