Correlation Between Exchange Traded and CHIS

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

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

Diversification Opportunities for Exchange Traded and CHIS

0.95

Correlation Coefficient

Exchange Traded  CHIS

Almost no diversification

The 3 months correlation between Exchange and CHIS is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and CHIS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHIS and Exchange Traded 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 Traded Concepts are associated (or correlated) with CHIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHIS has no effect on the direction of Exchange Traded i.e., Exchange Traded and CHIS go up and down completely randomly.

Pair Corralation between Exchange Traded and CHIS

If you would invest  1,981  in CHIS on September 21, 2024 and sell it today you would earn a total of  0.00  from holding CHIS or generate 0.0% return on investment over 90 days.

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

Exchange Traded Concepts  vs.  CHIS

Exchange Traded Concepts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exchange Traded Concepts has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Exchange Traded is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CHIS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHIS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, CHIS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Exchange Traded and CHIS

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

The idea behind Exchange Traded Concepts and CHIS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.