Correlation Between Chestnut Street and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Chestnut Street and Templeton Foreign 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 Templeton Foreign 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 Templeton Foreign Fund, you can compare the effects of market volatilities on Chestnut Street and Templeton Foreign 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 Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chestnut Street and Templeton Foreign.
Diversification Opportunities for Chestnut Street and Templeton Foreign
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chestnut and Templeton is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Chestnut Street Exchange and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Chestnut Street i.e., Chestnut Street and Templeton Foreign go up and down completely randomly.
Pair Corralation between Chestnut Street and Templeton Foreign
Assuming the 90 days horizon Chestnut Street Exchange is expected to generate 0.69 times more return on investment than Templeton Foreign. However, Chestnut Street Exchange is 1.45 times less risky than Templeton Foreign. It trades about 0.12 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about 0.03 per unit of risk. If you would invest 95,642 in Chestnut Street Exchange on August 24, 2024 and sell it today you would earn a total of 20,298 from holding Chestnut Street Exchange or generate 21.22% 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. Templeton Foreign Fund
Performance |
| Timeline |
| Chestnut Street Exchange |
| Templeton Foreign |
Chestnut Street and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chestnut Street and Templeton Foreign
The main advantage of trading using opposite Chestnut Street and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chestnut Street position performs unexpectedly, Templeton Foreign 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 Templeton Foreign will offset losses from the drop in Templeton Foreign's long position.| Chestnut Street vs. Qs Large Cap | Chestnut Street vs. Federated Mdt Large | Chestnut Street vs. Nuveen Winslow Large Cap | Chestnut Street vs. T Rowe Price |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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