Correlation Between Exchange Income and Chartwell Retirement

Can any of the company-specific risk be diversified away by investing in both Exchange Income and Chartwell Retirement 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 Exchange Income and Chartwell Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Exchange Income and Chartwell Retirement Residences, you can compare the effects of market volatilities on Exchange Income and Chartwell Retirement 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 Exchange Income with a short position of Chartwell Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Income and Chartwell Retirement.

Diversification Opportunities for Exchange Income and Chartwell Retirement

-0.52

Correlation Coefficient

Exchange Income  Chartwell Retirement

Excellent diversification

The 3 months correlation between Exchange and Chartwell is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and Chartwell Retirement Residence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Retirement and Exchange Income 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 Exchange Income are associated (or correlated) with Chartwell Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Retirement has no effect on the direction of Exchange Income i.e., Exchange Income and Chartwell Retirement go up and down completely randomly.

Pair Corralation between Exchange Income and Chartwell Retirement

Assuming the 90 days trading horizon Exchange Income is expected to under-perform the Chartwell Retirement. In addition to that, Exchange Income is 1.03 times more volatile than Chartwell Retirement Residences. It trades about -0.07 of its total potential returns per unit of risk. Chartwell Retirement Residences is currently generating about 0.03 per unit of volatility. If you would invest  1,605  in Chartwell Retirement Residences on November 20, 2024 and sell it today you would earn a total of  32.00  from holding Chartwell Retirement Residences or generate 1.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Exchange Income  vs.  Chartwell Retirement Residence

Exchange Income

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exchange Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Exchange Income is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Chartwell Retirement

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Retirement Residences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical indicators, Chartwell Retirement is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Exchange Income and Chartwell Retirement

The main advantage of trading using opposite Exchange Income and Chartwell Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Income position performs unexpectedly, Chartwell Retirement 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 Chartwell Retirement will offset losses from the drop in Chartwell Retirement's long position.

The idea behind Exchange Income and Chartwell Retirement Residences 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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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.