Correlation Between Matson Money and Chestnut Street
Can any of the company-specific risk be diversified away by investing in both Matson Money and Chestnut Street 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 Matson Money and Chestnut Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matson Money Equity and Chestnut Street Exchange, you can compare the effects of market volatilities on Matson Money and Chestnut Street 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 Matson Money with a short position of Chestnut Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson Money and Chestnut Street.
Diversification Opportunities for Matson Money and Chestnut Street
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Matson and Chestnut is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Matson Money Equity and Chestnut Street Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chestnut Street Exchange and Matson Money 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 Matson Money Equity are associated (or correlated) with Chestnut Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chestnut Street Exchange has no effect on the direction of Matson Money i.e., Matson Money and Chestnut Street go up and down completely randomly.
Pair Corralation between Matson Money and Chestnut Street
Assuming the 90 days horizon Matson Money Equity is expected to generate 1.66 times more return on investment than Chestnut Street. However, Matson Money is 1.66 times more volatile than Chestnut Street Exchange. It trades about 0.25 of its potential returns per unit of risk. Chestnut Street Exchange is currently generating about 0.2 per unit of risk. If you would invest 3,542 in Matson Money Equity on August 28, 2024 and sell it today you would earn a total of 256.00 from holding Matson Money Equity or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matson Money Equity vs. Chestnut Street Exchange
Performance |
| Timeline |
| Matson Money Equity |
| Chestnut Street Exchange |
Matson Money and Chestnut Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matson Money and Chestnut Street
The main advantage of trading using opposite Matson Money and Chestnut Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson Money position performs unexpectedly, Chestnut Street 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 Chestnut Street will offset losses from the drop in Chestnut Street's long position.| Matson Money vs. Conservative Balanced Allocation | Matson Money vs. Pgim Conservative Retirement | Matson Money vs. Tiaa Cref Lifestyle Conservative | Matson Money vs. Aqr Diversified Arbitrage |
| Chestnut Street vs. Vanguard Total Stock | Chestnut Street vs. Vanguard 500 Index | Chestnut Street vs. Vanguard Total Stock | Chestnut Street vs. Vanguard Total Stock |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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