Correlation Between Chesapeake Granite and International Equity

Can any of the company-specific risk be diversified away by investing in both Chesapeake Granite and International Equity 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 International Equity 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 International Equity Portfolio, you can compare the effects of market volatilities on Chesapeake Granite and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Granite and International Equity.

Diversification Opportunities for Chesapeake Granite and International Equity

-0.67

Correlation Coefficient

Chesapeake Granite  International Equity

Excellent diversification

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

Pair Corralation between Chesapeake Granite and International Equity

Given the investment horizon of 90 days Chesapeake Granite Wash is expected to generate 1.08 times more return on investment than International Equity. However, Chesapeake Granite is 1.08 times more volatile than International Equity Portfolio. It trades about 0.04 of its potential returns per unit of risk. International Equity Portfolio is currently generating about -0.02 per unit of risk. If you would invest  111.00  in Chesapeake Granite Wash on October 22, 2024 and sell it today you would earn a total of  7.00  from holding Chesapeake Granite Wash or generate 6.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	24.44%
Values	Daily Returns

Chesapeake Granite Wash  vs.  International Equity Portfolio

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.

International Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Equity Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's fundamental drivers remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Chesapeake Granite and International Equity

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

The idea behind Chesapeake Granite Wash and International Equity Portfolio 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.