Correlation Between LIFENET INSURANCE and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both LIFENET INSURANCE 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 LIFENET INSURANCE and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LIFENET INSURANCE CO and Chesapeake Utilities, you can compare the effects of market volatilities on LIFENET INSURANCE 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 LIFENET INSURANCE with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of LIFENET INSURANCE and Chesapeake Utilities.
Diversification Opportunities for LIFENET INSURANCE and Chesapeake Utilities
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LIFENET and Chesapeake is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding LIFENET INSURANCE CO and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and LIFENET INSURANCE 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 LIFENET INSURANCE CO 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 LIFENET INSURANCE i.e., LIFENET INSURANCE and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between LIFENET INSURANCE and Chesapeake Utilities
Assuming the 90 days horizon LIFENET INSURANCE CO is expected to under-perform the Chesapeake Utilities. In addition to that, LIFENET INSURANCE is 1.98 times more volatile than Chesapeake Utilities. It trades about -0.11 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.01 per unit of volatility. If you would invest 12,000 in Chesapeake Utilities on September 15, 2024 and sell it today you would earn a total of 0.00 from holding Chesapeake Utilities or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LIFENET INSURANCE CO vs. Chesapeake Utilities
Performance |
| Timeline |
| LIFENET INSURANCE |
| Chesapeake Utilities |
LIFENET INSURANCE and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LIFENET INSURANCE and Chesapeake Utilities
The main advantage of trading using opposite LIFENET INSURANCE and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LIFENET INSURANCE 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.| LIFENET INSURANCE vs. Xtrackers LevDAX | LIFENET INSURANCE vs. Lyxor 1 | LIFENET INSURANCE vs. Xtrackers ShortDAX |
| Chesapeake Utilities vs. Thai Beverage Public | Chesapeake Utilities vs. Monster Beverage Corp | Chesapeake Utilities vs. Suntory Beverage Food | Chesapeake Utilities vs. Perseus Mining Limited |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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