Correlation Between Chesapeake Granite and GraniteShares FAANG

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

By analyzing existing cross correlation between Chesapeake Granite Wash and GraniteShares FAANG ETC, you can compare the effects of market volatilities on Chesapeake Granite and GraniteShares FAANG 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 Granite with a short position of GraniteShares FAANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Granite and GraniteShares FAANG.

Diversification Opportunities for Chesapeake Granite and GraniteShares FAANG

0.82

Correlation Coefficient

Chesapeake Granite  GraniteShares FAANG

Very poor diversification

The 3 months correlation between Chesapeake and GraniteShares is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Granite Wash and GraniteShares FAANG ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GraniteShares FAANG ETC and Chesapeake Granite 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 Chesapeake Granite Wash are associated (or correlated) with GraniteShares FAANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GraniteShares FAANG ETC has no effect on the direction of Chesapeake Granite i.e., Chesapeake Granite and GraniteShares FAANG go up and down completely randomly.

Pair Corralation between Chesapeake Granite and GraniteShares FAANG

Given the investment horizon of 90 days Chesapeake Granite is expected to generate 2.21 times less return on investment than GraniteShares FAANG. In addition to that, Chesapeake Granite is 1.21 times more volatile than GraniteShares FAANG ETC. It trades about 0.06 of its total potential returns per unit of risk. GraniteShares FAANG ETC is currently generating about 0.15 per unit of volatility. If you would invest  1,896  in GraniteShares FAANG ETC on October 4, 2024 and sell it today you would earn a total of  3,261  from holding GraniteShares FAANG ETC or generate 171.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	26.56%
Values	Daily Returns

Chesapeake Granite Wash  vs.  GraniteShares FAANG ETC

Chesapeake Granite Wash

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chesapeake Granite Wash has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Chesapeake Granite is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

GraniteShares FAANG ETC

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares FAANG ETC are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, GraniteShares FAANG unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Granite and GraniteShares FAANG

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

The idea behind Chesapeake Granite Wash and GraniteShares FAANG ETC 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.