Correlation Between Issachar Fund and Chestnut Street
Can any of the company-specific risk be diversified away by investing in both Issachar Fund 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 Issachar Fund and Chestnut Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Issachar Fund Class and Chestnut Street Exchange, you can compare the effects of market volatilities on Issachar Fund 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 Issachar Fund with a short position of Chestnut Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Issachar Fund and Chestnut Street.
Diversification Opportunities for Issachar Fund and Chestnut Street
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Issachar and Chestnut is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Issachar Fund Class 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 Issachar Fund 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 Issachar Fund Class 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 Issachar Fund i.e., Issachar Fund and Chestnut Street go up and down completely randomly.
Pair Corralation between Issachar Fund and Chestnut Street
Assuming the 90 days horizon Issachar Fund is expected to generate 1.96 times less return on investment than Chestnut Street. In addition to that, Issachar Fund is 1.36 times more volatile than Chestnut Street Exchange. It trades about 0.05 of its total potential returns per unit of risk. Chestnut Street Exchange is currently generating about 0.13 per unit of volatility. If you would invest 96,467 in Chestnut Street Exchange on September 3, 2024 and sell it today you would earn a total of 22,225 from holding Chestnut Street Exchange or generate 23.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Issachar Fund Class vs. Chestnut Street Exchange
Performance |
| Timeline |
| Issachar Fund Class |
| Chestnut Street Exchange |
Issachar Fund and Chestnut Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Issachar Fund and Chestnut Street
The main advantage of trading using opposite Issachar Fund and Chestnut Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Issachar Fund 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.The idea behind Issachar Fund Class and Chestnut Street Exchange 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.
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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