Correlation Between Chesapeake Energy and GoGold Resources
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and GoGold Resources 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 GoGold Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and GoGold Resources, you can compare the effects of market volatilities on Chesapeake Energy and GoGold Resources 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 GoGold Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and GoGold Resources.
Diversification Opportunities for Chesapeake Energy and GoGold Resources
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and GoGold is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and GoGold Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoGold Resources 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 GoGold Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoGold Resources has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and GoGold Resources go up and down completely randomly.
Pair Corralation between Chesapeake Energy and GoGold Resources
Assuming the 90 days horizon Chesapeake Energy is expected to under-perform the GoGold Resources. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Energy is 1.6 times less risky than GoGold Resources. The stock trades about -0.1 of its potential returns per unit of risk. The GoGold Resources is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 110.00 in GoGold Resources on September 1, 2024 and sell it today you would lose (18.00) from holding GoGold Resources or give up 16.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 67.46% |
| Values | Daily Returns |
Chesapeake Energy vs. GoGold Resources
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| GoGold Resources |
Chesapeake Energy and GoGold Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and GoGold Resources
The main advantage of trading using opposite Chesapeake Energy and GoGold Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, GoGold Resources 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 GoGold Resources will offset losses from the drop in GoGold Resources' long position.| Chesapeake Energy vs. Vera Bradley | Chesapeake Energy vs. Ryanair Holdings PLC | Chesapeake Energy vs. Lindblad Expeditions Holdings | Chesapeake Energy vs. Rocky Brands |
| GoGold Resources vs. South32 Limited | GoGold Resources vs. NioCorp Developments Ltd | GoGold Resources vs. HUMANA INC | GoGold Resources vs. SCOR PK |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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