Correlation Between Investec Global and Chartwell Short

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Can any of the company-specific risk be diversified away by investing in both Investec Global and Chartwell Short 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 Investec Global and Chartwell Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investec Global Franchise and Chartwell Short Duration, you can compare the effects of market volatilities on Investec Global and Chartwell Short 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 Investec Global with a short position of Chartwell Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investec Global and Chartwell Short.

Diversification Opportunities for Investec Global and Chartwell Short

InvestecChartwellDiversified AwayInvestecChartwellDiversified Away100%
0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Investec and Chartwell is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Investec Global Franchise and Chartwell Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chartwell Short Duration and Investec Global 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 Investec Global Franchise are associated (or correlated) with Chartwell Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chartwell Short Duration has no effect on the direction of Investec Global i.e., Investec Global and Chartwell Short go up and down completely randomly.

Pair Corralation between Investec Global and Chartwell Short

Assuming the 90 days horizon Investec Global Franchise is expected to generate 5.72 times more return on investment than Chartwell Short. However, Investec Global is 5.72 times more volatile than Chartwell Short Duration. It trades about 0.03 of its potential returns per unit of risk. Chartwell Short Duration is currently generating about 0.14 per unit of risk. If you would invest  1,756  in Investec Global Franchise on October 21, 2024 and sell it today you would earn a total of  17.00  from holding Investec Global Franchise or generate 0.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Investec Global Franchise  vs.  Chartwell Short Duration

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -3-2-1012
JavaScript chart by amCharts 3.21.15ZGFIX CWFAX
       Timeline  
Investec Global Franchise 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Investec Global Franchise are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Investec Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan17.217.417.617.818
Chartwell Short Duration 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Chartwell Short Duration are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Chartwell Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan9.429.449.469.489.59.52

Investec Global and Chartwell Short Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.01-1.51-1.01-0.51-0.02520.440.941.441.942.44 5101520253035
JavaScript chart by amCharts 3.21.15ZGFIX CWFAX
       Returns  

Pair Trading with Investec Global and Chartwell Short

The main advantage of trading using opposite Investec Global and Chartwell Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investec Global position performs unexpectedly, Chartwell Short 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 Short will offset losses from the drop in Chartwell Short's long position.
The idea behind Investec Global Franchise and Chartwell Short Duration 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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