Correlation Between Chesapeake Energy and Galane Gold
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Galane Gold 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 Energy and Galane Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Galane Gold, you can compare the effects of market volatilities on Chesapeake Energy and Galane Gold 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 Energy with a short position of Galane Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Galane Gold.
Diversification Opportunities for Chesapeake Energy and Galane Gold
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and Galane is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Galane Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galane Gold and Chesapeake Energy 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 Energy are associated (or correlated) with Galane Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galane Gold has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Galane Gold go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Galane Gold
Assuming the 90 days horizon Chesapeake Energy is expected to under-perform the Galane Gold. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Energy is 2.99 times less risky than Galane Gold. The stock trades about -0.02 of its potential returns per unit of risk. The Galane Gold is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 24.00 in Galane Gold on September 3, 2024 and sell it today you would lose (1.00) from holding Galane Gold or give up 4.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.52% |
| Values | Daily Returns |
Chesapeake Energy vs. Galane Gold
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Galane Gold |
Chesapeake Energy and Galane Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Galane Gold
The main advantage of trading using opposite Chesapeake Energy and Galane Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Galane Gold 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 Galane Gold will offset losses from the drop in Galane Gold's long position.| Chesapeake Energy vs. NGL Energy Partners | Chesapeake Energy vs. Global Partners LP | Chesapeake Energy vs. Crescent Energy Co |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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