Correlation Between CHS and CHS
Can any of the company-specific risk be diversified away by investing in both CHS and CHS 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 CHS and CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHS Inc CL and CHS Inc CM, you can compare the effects of market volatilities on CHS and CHS 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 CHS with a short position of CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHS and CHS.
Diversification Opportunities for CHS and CHS
Poor diversification
The 3 months correlation between CHS and CHS is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding CHS Inc CL and CHS Inc CM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CM and CHS 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 CHS Inc CL are associated (or correlated) with CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CM has no effect on the direction of CHS i.e., CHS and CHS go up and down completely randomly.
Pair Corralation between CHS and CHS
Assuming the 90 days horizon CHS Inc CL is expected to under-perform the CHS. But the preferred stock apears to be less risky and, when comparing its historical volatility, CHS Inc CL is 1.04 times less risky than CHS. The preferred stock trades about -0.12 of its potential returns per unit of risk. The CHS Inc CM is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 2,540 in CHS Inc CM on August 31, 2024 and sell it today you would lose (23.00) from holding CHS Inc CM or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHS Inc CL vs. CHS Inc CM
Performance |
| Timeline |
| CHS Inc CL |
| CHS Inc CM |
CHS and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHS and CHS
The main advantage of trading using opposite CHS and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHS position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.The idea behind CHS Inc CL and CHS Inc CM pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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