Correlation Between Aig Government and Chestnut Street
Can any of the company-specific risk be diversified away by investing in both Aig Government 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 Aig Government and Chestnut Street into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aig Government Money and Chestnut Street Exchange, you can compare the effects of market volatilities on Aig Government 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 Aig Government with a short position of Chestnut Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aig Government and Chestnut Street.
Diversification Opportunities for Aig Government and Chestnut Street
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aig and Chestnut is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aig Government Money 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 Aig Government 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 Aig Government Money 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 Aig Government i.e., Aig Government and Chestnut Street go up and down completely randomly.
Pair Corralation between Aig Government and Chestnut Street
Assuming the 90 days horizon Aig Government is expected to generate 17.69 times less return on investment than Chestnut Street. But when comparing it to its historical volatility, Aig Government Money is 3.69 times less risky than Chestnut Street. It trades about 0.09 of its potential returns per unit of risk. Chestnut Street Exchange is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 112,583 in Chestnut Street Exchange on November 4, 2024 and sell it today you would earn a total of 5,772 from holding Chestnut Street Exchange or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Aig Government Money vs. Chestnut Street Exchange
Performance |
| Timeline |
| Aig Government Money |
| Chestnut Street Exchange |
Aig Government and Chestnut Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aig Government and Chestnut Street
The main advantage of trading using opposite Aig Government and Chestnut Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aig Government 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.| Aig Government vs. Federated Emerging Market | Aig Government vs. Angel Oak Multi Strategy | Aig Government vs. Siit Emerging Markets | Aig Government vs. Ashmore Emerging Markets |
| Chestnut Street vs. Ab Bond Inflation | Chestnut Street vs. Ab Bond Inflation | Chestnut Street vs. Ab Bond Inflation | Chestnut Street vs. Lord Abbett Inflation |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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