Correlation Between Chesapeake Growth and Chase Growth

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

By analyzing existing cross correlation between The Chesapeake Growth and Chase Growth Fund, you can compare the effects of market volatilities on Chesapeake Growth and Chase Growth 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 Chesapeake Growth with a short position of Chase Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Growth and Chase Growth.

Diversification Opportunities for Chesapeake Growth and Chase Growth

0.97

Correlation Coefficient

Chesapeake Growth  Chase Growth

Almost no diversification

The 3 months correlation between Chesapeake and Chase is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding The Chesapeake Growth and Chase Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase Growth and Chesapeake Growth 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 The Chesapeake Growth are associated (or correlated) with Chase Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase Growth has no effect on the direction of Chesapeake Growth i.e., Chesapeake Growth and Chase Growth go up and down completely randomly.

Pair Corralation between Chesapeake Growth and Chase Growth

Assuming the 90 days horizon Chesapeake Growth is expected to generate 2.11 times less return on investment than Chase Growth. But when comparing it to its historical volatility, The Chesapeake Growth is 1.15 times less risky than Chase Growth. It trades about 0.14 of its potential returns per unit of risk. Chase Growth Fund is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,564  in Chase Growth Fund on September 12, 2024 and sell it today you would earn a total of  204.00  from holding Chase Growth Fund or generate 13.04% return on investment over 90 days.

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

The Chesapeake Growth  vs.  Chase Growth Fund

Chesapeake Growth

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Chesapeake Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Chesapeake Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Chase Growth

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chase Growth Fund are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Chase Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Chesapeake Growth and Chase Growth

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

The idea behind The Chesapeake Growth and Chase Growth Fund 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.