Correlation Between Spirent Communications and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and Chesapeake Utilities, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and Chesapeake Utilities.
Diversification Opportunities for Spirent Communications and Chesapeake Utilities
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Spirent and Chesapeake is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Spirent Communications and Chesapeake Utilities
Assuming the 90 days horizon Spirent Communications plc is expected to under-perform the Chesapeake Utilities. In addition to that, Spirent Communications is 2.69 times more volatile than Chesapeake Utilities. It trades about -0.1 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.23 per unit of volatility. If you would invest 11,400 in Chesapeake Utilities on October 22, 2024 and sell it today you would earn a total of 500.00 from holding Chesapeake Utilities or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. Chesapeake Utilities
Performance |
| Timeline |
| Spirent Communications |
| Chesapeake Utilities |
Spirent Communications and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and Chesapeake Utilities
The main advantage of trading using opposite Spirent Communications and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. AAC TECHNOLOGHLDGADR | Spirent Communications vs. BioNTech SE | Spirent Communications vs. BJs Restaurants | Spirent Communications vs. Salesforce |
| Chesapeake Utilities vs. INSURANCE AUST GRP | Chesapeake Utilities vs. QBE Insurance Group | Chesapeake Utilities vs. PRECISION DRILLING P | Chesapeake Utilities vs. FIH MOBILE |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |