Correlation Between Emerald Growth and Chesapeake Growth
Can any of the company-specific risk be diversified away by investing in both Emerald Growth and Chesapeake Growth 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 Emerald Growth and Chesapeake Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerald Growth Fund and The Chesapeake Growth, you can compare the effects of market volatilities on Emerald Growth and Chesapeake Growth 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 Emerald Growth with a short position of Chesapeake Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerald Growth and Chesapeake Growth.
Diversification Opportunities for Emerald Growth and Chesapeake Growth
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Emerald and Chesapeake is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Growth Fund and The Chesapeake Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Growth and Emerald Growth 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 Emerald Growth Fund are associated (or correlated) with Chesapeake Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Growth has no effect on the direction of Emerald Growth i.e., Emerald Growth and Chesapeake Growth go up and down completely randomly.
Pair Corralation between Emerald Growth and Chesapeake Growth
Assuming the 90 days horizon Emerald Growth Fund is expected to generate 2.39 times more return on investment than Chesapeake Growth. However, Emerald Growth is 2.39 times more volatile than The Chesapeake Growth. It trades about 0.03 of its potential returns per unit of risk. The Chesapeake Growth is currently generating about -0.07 per unit of risk. If you would invest 1,835 in Emerald Growth Fund on September 13, 2024 and sell it today you would earn a total of 10.00 from holding Emerald Growth Fund or generate 0.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerald Growth Fund vs. The Chesapeake Growth
Performance |
| Timeline |
| Emerald Growth |
| Chesapeake Growth |
Emerald Growth and Chesapeake Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerald Growth and Chesapeake Growth
The main advantage of trading using opposite Emerald Growth and Chesapeake Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Growth position performs unexpectedly, Chesapeake Growth 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 Chesapeake Growth will offset losses from the drop in Chesapeake Growth's long position.| Emerald Growth vs. Emerald Growth Fund | Emerald Growth vs. Driehaus Micro Cap | Emerald Growth vs. Eventide Gilead Fund | Emerald Growth vs. Emerald Banking And |
| Chesapeake Growth vs. Emerald Growth Fund | Chesapeake Growth vs. Victory Rs Partners | Chesapeake Growth vs. Hotchkis Wiley Large | Chesapeake Growth vs. Chase Growth Fund |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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