Correlation Between Chestnut Street and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Gmo Global 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 Gmo Global 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 Gmo Global Equity, you can compare the effects of market volatilities on Chestnut Street and Gmo Global 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 Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Gmo Global.
Diversification Opportunities for Chestnut Street and Gmo Global
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chestnut and Gmo is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity 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 Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Chestnut Street i.e., Chestnut Street and Gmo Global go up and down completely randomly.
Pair Corralation between Chestnut Street and Gmo Global
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 0.77 times more return on investment than Gmo Global. However, Chestnut Street Exchange is 1.29 times less risky than Gmo Global. It trades about 0.1 of its potential returns per unit of risk. Gmo Global Equity is currently generating about 0.07 per unit of risk. If you would invest 99,201 in Chestnut Street Exchange on November 9, 2024 and sell it today you would earn a total of 18,062 from holding Chestnut Street Exchange or generate 18.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Gmo Global Equity
Performance |
| Timeline |
| Chestnut Street Exchange |
| Gmo Global Equity |
Chestnut Street and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Gmo Global
The main advantage of trading using opposite Chestnut Street and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Gmo Global 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 Gmo Global will offset losses from the drop in Gmo Global's long position.| Chestnut Street vs. Franklin Small Cap | Chestnut Street vs. Morningstar Growth Etf | Chestnut Street vs. United Kingdom Small | Chestnut Street vs. Needham Aggressive Growth |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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