Correlation Between Science Applications and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Chesapeake Utilities, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Chesapeake Utilities.
Diversification Opportunities for Science Applications and Chesapeake Utilities
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Science and Chesapeake is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Science Applications and Chesapeake Utilities
Assuming the 90 days trading horizon Science Applications is expected to generate 2.0 times less return on investment than Chesapeake Utilities. In addition to that, Science Applications is 1.52 times more volatile than Chesapeake Utilities. It trades about 0.04 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.12 per unit of volatility. If you would invest 10,079 in Chesapeake Utilities on September 1, 2024 and sell it today you would earn a total of 2,221 from holding Chesapeake Utilities or generate 22.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Chesapeake Utilities
Performance |
| Timeline |
| Science Applications |
| Chesapeake Utilities |
Science Applications and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Chesapeake Utilities
The main advantage of trading using opposite Science Applications and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc | Science Applications vs. Apple Inc |
| Chesapeake Utilities vs. Coeur Mining | Chesapeake Utilities vs. Check Point Software | Chesapeake Utilities vs. PKSHA TECHNOLOGY INC | Chesapeake Utilities vs. Vishay Intertechnology |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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