Correlation Between GCM Grosvenor and Chesapeake Energy

Can any of the company-specific risk be diversified away by investing in both GCM Grosvenor and Chesapeake Energy 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 GCM Grosvenor and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GCM Grosvenor and Chesapeake Energy, you can compare the effects of market volatilities on GCM Grosvenor and Chesapeake Energy 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 GCM Grosvenor with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GCM Grosvenor and Chesapeake Energy.

Diversification Opportunities for GCM Grosvenor and Chesapeake Energy

0.78

Correlation Coefficient

GCM Grosvenor  Chesapeake Energy

Poor diversification

The 3 months correlation between GCM and Chesapeake is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GCM Grosvenor and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and GCM Grosvenor 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 GCM Grosvenor are associated (or correlated) with Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of GCM Grosvenor i.e., GCM Grosvenor and Chesapeake Energy go up and down completely randomly.

Pair Corralation between GCM Grosvenor and Chesapeake Energy

Assuming the 90 days horizon GCM Grosvenor is expected to under-perform the Chesapeake Energy. In addition to that, GCM Grosvenor is 8.75 times more volatile than Chesapeake Energy. It trades about -0.15 of its total potential returns per unit of risk. Chesapeake Energy is currently generating about 0.21 per unit of volatility. If you would invest  7,651  in Chesapeake Energy on January 28, 2024 and sell it today you would earn a total of  172.00  from holding Chesapeake Energy or generate 2.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

GCM Grosvenor  vs.  Chesapeake Energy

GCM Grosvenor

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GCM Grosvenor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, GCM Grosvenor showed solid returns over the last few months and may actually be approaching a breakup point.

Chesapeake Energy

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Energy are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Chesapeake Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with GCM Grosvenor and Chesapeake Energy

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

The idea behind GCM Grosvenor and Chesapeake Energy 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.