Correlation Between Chesapeake Granite and Inverse Sp

Can any of the company-specific risk be diversified away by investing in both Chesapeake Granite and Inverse Sp 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 Inverse Sp 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 Inverse Sp 500, you can compare the effects of market volatilities on Chesapeake Granite and Inverse Sp 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 Inverse Sp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Granite and Inverse Sp.

Diversification Opportunities for Chesapeake Granite and Inverse Sp

0.0

Correlation Coefficient

Chesapeake Granite  Inverse Sp

Pay attention - limited upside

The 3 months correlation between Chesapeake and Inverse is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Granite Wash and Inverse Sp 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inverse Sp 500 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 Inverse Sp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inverse Sp 500 has no effect on the direction of Chesapeake Granite i.e., Chesapeake Granite and Inverse Sp go up and down completely randomly.

Pair Corralation between Chesapeake Granite and Inverse Sp

Given the investment horizon of 90 days Chesapeake Granite Wash is expected to generate 1.03 times more return on investment than Inverse Sp. However, Chesapeake Granite is 1.03 times more volatile than Inverse Sp 500. It trades about 0.06 of its potential returns per unit of risk. Inverse Sp 500 is currently generating about -0.08 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	Flat
Strength	Insignificant
Accuracy	26.67%
Values	Daily Returns

Chesapeake Granite Wash  vs.  Inverse Sp 500

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.

Inverse Sp 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inverse Sp 500 has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Chesapeake Granite and Inverse Sp

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

The idea behind Chesapeake Granite Wash and Inverse Sp 500 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..