Correlation Between Chestnut Street and Blue Chip
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Blue Chip 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 Blue Chip 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 Blue Chip Fund, you can compare the effects of market volatilities on Chestnut Street and Blue Chip 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 Blue Chip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Blue Chip.
Diversification Opportunities for Chestnut Street and Blue Chip
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chestnut and Blue is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Blue Chip Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Chip 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 Blue Chip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Chip Fund has no effect on the direction of Chestnut Street i.e., Chestnut Street and Blue Chip go up and down completely randomly.
Pair Corralation between Chestnut Street and Blue Chip
Assuming the 90 days horizon Chestnut Street is expected to generate 1.69 times less return on investment than Blue Chip. But when comparing it to its historical volatility, Chestnut Street Exchange is 1.29 times less risky than Blue Chip. It trades about 0.1 of its potential returns per unit of risk. Blue Chip Fund is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,763 in Blue Chip Fund on September 12, 2024 and sell it today you would earn a total of 2,122 from holding Blue Chip Fund or generate 76.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Blue Chip Fund
Performance |
| Timeline |
| Chestnut Street Exchange |
| Blue Chip Fund |
Chestnut Street and Blue Chip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Blue Chip
The main advantage of trading using opposite Chestnut Street and Blue Chip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Blue Chip 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 Blue Chip will offset losses from the drop in Blue Chip'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 |
| Blue Chip vs. John Hancock Money | Blue Chip vs. Matson Money Equity | Blue Chip vs. Chestnut Street Exchange | Blue Chip vs. Franklin Government Money |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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