Correlation Between Rai Way and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Rai Way and Chesapeake Utilities 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 Rai Way and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rai Way SpA and Chesapeake Utilities, you can compare the effects of market volatilities on Rai Way and Chesapeake Utilities 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 Rai Way with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rai Way and Chesapeake Utilities.
Diversification Opportunities for Rai Way and Chesapeake Utilities
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rai and Chesapeake is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Rai Way SpA and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Rai Way 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 Rai Way SpA are associated (or correlated) with Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Rai Way i.e., Rai Way and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Rai Way and Chesapeake Utilities
Assuming the 90 days horizon Rai Way SpA is expected to under-perform the Chesapeake Utilities. But the stock apears to be less risky and, when comparing its historical volatility, Rai Way SpA is 1.57 times less risky than Chesapeake Utilities. The stock trades about -0.16 of its potential returns per unit of risk. The Chesapeake Utilities is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 10,700 in Chesapeake Utilities on September 4, 2024 and sell it today you would earn a total of 1,700 from holding Chesapeake Utilities or generate 15.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Rai Way SpA vs. Chesapeake Utilities
Performance |
| Timeline |
| Rai Way SpA |
| Chesapeake Utilities |
Rai Way and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rai Way and Chesapeake Utilities
The main advantage of trading using opposite Rai Way and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rai Way position performs unexpectedly, Chesapeake Utilities 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 Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Rai Way vs. Chesapeake Utilities | Rai Way vs. Beijing Media | Rai Way vs. Townsquare Media | Rai Way vs. Universal Entertainment |
| Chesapeake Utilities vs. National Beverage Corp | Chesapeake Utilities vs. PREMIER FOODS | Chesapeake Utilities vs. Fevertree Drinks PLC | Chesapeake Utilities vs. MOLSON RS BEVERAGE |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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