Correlation Between Chestnut Street and Hawaiian Tax-free
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Hawaiian Tax-free 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 Hawaiian Tax-free 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 Hawaiian Tax Free Trust, you can compare the effects of market volatilities on Chestnut Street and Hawaiian Tax-free 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 Hawaiian Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Hawaiian Tax-free.
Diversification Opportunities for Chestnut Street and Hawaiian Tax-free
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chestnut and Hawaiian is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Hawaiian Tax Free Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Tax Free 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 Hawaiian Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Tax Free has no effect on the direction of Chestnut Street i.e., Chestnut Street and Hawaiian Tax-free go up and down completely randomly.
Pair Corralation between Chestnut Street and Hawaiian Tax-free
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 3.83 times more return on investment than Hawaiian Tax-free. However, Chestnut Street is 3.83 times more volatile than Hawaiian Tax Free Trust. It trades about 0.19 of its potential returns per unit of risk. Hawaiian Tax Free Trust is currently generating about 0.16 per unit of risk. If you would invest 113,531 in Chestnut Street Exchange on August 29, 2024 and sell it today you would earn a total of 3,968 from holding Chestnut Street Exchange or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Hawaiian Tax Free Trust
Performance |
| Timeline |
| Chestnut Street Exchange |
| Hawaiian Tax Free |
Chestnut Street and Hawaiian Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Hawaiian Tax-free
The main advantage of trading using opposite Chestnut Street and Hawaiian Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Hawaiian Tax-free 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 Hawaiian Tax-free will offset losses from the drop in Hawaiian Tax-free's long position.| Chestnut Street vs. Fidelity Advisor Health | Chestnut Street vs. Alphacentric Lifesci Healthcare | Chestnut Street vs. Baron Health Care | Chestnut Street vs. Allianzgi Health Sciences |
| Hawaiian Tax-free vs. Aquila Three Peaks | Hawaiian Tax-free vs. Aquila Three Peaks | Hawaiian Tax-free vs. Aquila Three Peaks | Hawaiian Tax-free vs. Aquila Three Peaks |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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