Correlation Between Chestnut Street and Prudential Health
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Prudential Health 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 Prudential Health 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 Prudential Health Sciences, you can compare the effects of market volatilities on Chestnut Street and Prudential Health 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 Prudential Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Prudential Health.
Diversification Opportunities for Chestnut Street and Prudential Health
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chestnut and Prudential is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Prudential Health Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Health 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 Prudential Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Health has no effect on the direction of Chestnut Street i.e., Chestnut Street and Prudential Health go up and down completely randomly.
Pair Corralation between Chestnut Street and Prudential Health
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 0.81 times more return on investment than Prudential Health. However, Chestnut Street Exchange is 1.24 times less risky than Prudential Health. It trades about 0.09 of its potential returns per unit of risk. Prudential Health Sciences is currently generating about 0.05 per unit of risk. If you would invest 86,580 in Chestnut Street Exchange on September 2, 2024 and sell it today you would earn a total of 32,112 from holding Chestnut Street Exchange or generate 37.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Prudential Health Sciences
Performance |
| Timeline |
| Chestnut Street Exchange |
| Prudential Health |
Chestnut Street and Prudential Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Prudential Health
The main advantage of trading using opposite Chestnut Street and Prudential Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Prudential Health 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 Prudential Health will offset losses from the drop in Prudential Health's long position.| Chestnut Street vs. Dws Government Money | Chestnut Street vs. Jpmorgan Trust I | Chestnut Street vs. T Rowe Price | Chestnut Street vs. Cref Money Market |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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