Correlation Between Chestnut Street and Rising Rates
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Rising Rates 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 Rising Rates 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 Rising Rates Opportunity, you can compare the effects of market volatilities on Chestnut Street and Rising Rates 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 Rising Rates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Rising Rates.
Diversification Opportunities for Chestnut Street and Rising Rates
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chestnut and Rising is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Rising Rates Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Rates Opportunity 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 Rising Rates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Rates Opportunity has no effect on the direction of Chestnut Street i.e., Chestnut Street and Rising Rates go up and down completely randomly.
Pair Corralation between Chestnut Street and Rising Rates
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 0.59 times more return on investment than Rising Rates. However, Chestnut Street Exchange is 1.71 times less risky than Rising Rates. It trades about 0.09 of its potential returns per unit of risk. Rising Rates Opportunity is currently generating about 0.03 per unit of risk. If you would invest 86,580 in Chestnut Street Exchange on September 1, 2024 and sell it today you would earn a total of 31,849 from holding Chestnut Street Exchange or generate 36.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Chestnut Street Exchange vs. Rising Rates Opportunity
Performance |
| Timeline |
| Chestnut Street Exchange |
| Rising Rates Opportunity |
Chestnut Street and Rising Rates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Rising Rates
The main advantage of trading using opposite Chestnut Street and Rising Rates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Rising Rates 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 Rising Rates will offset losses from the drop in Rising Rates' long position.| Chestnut Street vs. Vanguard Total Stock | Chestnut Street vs. Vanguard 500 Index | Chestnut Street vs. Vanguard Total Stock | Chestnut Street vs. Vanguard Total Stock |
| Rising Rates vs. Legg Mason Partners | Rising Rates vs. Chestnut Street Exchange | Rising Rates vs. Blackrock Exchange Portfolio | Rising Rates vs. T Rowe Price |
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.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |