Correlation Between Chestnut Street and Guggenheim Market
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Guggenheim Market 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 Guggenheim Market 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 Guggenheim Market Neutral, you can compare the effects of market volatilities on Chestnut Street and Guggenheim Market 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 Guggenheim Market. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Guggenheim Market.
Diversification Opportunities for Chestnut Street and Guggenheim Market
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chestnut and Guggenheim is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Guggenheim Market Neutral in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim Market Neutral 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 Guggenheim Market. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim Market Neutral has no effect on the direction of Chestnut Street i.e., Chestnut Street and Guggenheim Market go up and down completely randomly.
Pair Corralation between Chestnut Street and Guggenheim Market
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 5.06 times more return on investment than Guggenheim Market. However, Chestnut Street is 5.06 times more volatile than Guggenheim Market Neutral. It trades about 0.15 of its potential returns per unit of risk. Guggenheim Market Neutral is currently generating about 0.02 per unit of risk. If you would invest 104,604 in Chestnut Street Exchange on September 3, 2024 and sell it today you would earn a total of 14,088 from holding Chestnut Street Exchange or generate 13.47% 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. Guggenheim Market Neutral
Performance |
| Timeline |
| Chestnut Street Exchange |
| Guggenheim Market Neutral |
Chestnut Street and Guggenheim Market Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Guggenheim Market
The main advantage of trading using opposite Chestnut Street and Guggenheim Market positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Guggenheim Market 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 Guggenheim Market will offset losses from the drop in Guggenheim Market's long position.| Chestnut Street vs. T Rowe Price | Chestnut Street vs. Bbh Intermediate Municipal | Chestnut Street vs. Morningstar Municipal Bond | Chestnut Street vs. Gamco Global Telecommunications |
| Guggenheim Market vs. Aam Select Income | Guggenheim Market vs. Leggmason Partners Institutional | Guggenheim Market vs. Rbb Fund | Guggenheim Market vs. Acm Dynamic Opportunity |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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