Correlation Between Chesapeake Granite and Putnam Ohio

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

Diversification Opportunities for Chesapeake Granite and Putnam Ohio

-0.36

Correlation Coefficient

Chesapeake Granite  Putnam Ohio

Very good diversification

The 3 months correlation between Chesapeake and Putnam is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Granite Wash and Putnam Ohio Tax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Ohio Tax 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 Putnam Ohio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Ohio Tax has no effect on the direction of Chesapeake Granite i.e., Chesapeake Granite and Putnam Ohio go up and down completely randomly.

Pair Corralation between Chesapeake Granite and Putnam Ohio

Given the investment horizon of 90 days Chesapeake Granite Wash is expected to generate 6.94 times more return on investment than Putnam Ohio. However, Chesapeake Granite is 6.94 times more volatile than Putnam Ohio Tax. It trades about 0.06 of its potential returns per unit of risk. Putnam Ohio Tax is currently generating about 0.04 per unit of risk. If you would invest  106.00  in Chesapeake Granite Wash on October 4, 2024 and sell it today you would earn a total of  12.00  from holding Chesapeake Granite Wash or generate 11.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	26.67%
Values	Daily Returns

Chesapeake Granite Wash  vs.  Putnam Ohio Tax

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.

Putnam Ohio Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Putnam Ohio Tax has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Putnam Ohio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chesapeake Granite and Putnam Ohio

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

The idea behind Chesapeake Granite Wash and Putnam Ohio Tax 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.