Correlation Between Chesapeake Utilities and Materialise
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Materialise 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 Chesapeake Utilities and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Materialise NV, you can compare the effects of market volatilities on Chesapeake Utilities and Materialise 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 Chesapeake Utilities with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Materialise.
Diversification Opportunities for Chesapeake Utilities and Materialise
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Materialise is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and Chesapeake Utilities 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 Chesapeake Utilities are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Materialise go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Materialise
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 1.71 times less return on investment than Materialise. But when comparing it to its historical volatility, Chesapeake Utilities is 3.07 times less risky than Materialise. It trades about 0.22 of its potential returns per unit of risk. Materialise NV is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 700.00 in Materialise NV on October 20, 2024 and sell it today you would earn a total of 50.00 from holding Materialise NV or generate 7.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 94.44% |
Values | Daily Returns |
Chesapeake Utilities vs. Materialise NV
Performance |
Timeline |
Chesapeake Utilities |
Materialise NV |
Chesapeake Utilities and Materialise Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chesapeake Utilities and Materialise
The main advantage of trading using opposite Chesapeake Utilities and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.Chesapeake Utilities vs. CVW CLEANTECH INC | Chesapeake Utilities vs. Alliance Data Systems | Chesapeake Utilities vs. CLEAN ENERGY FUELS | Chesapeake Utilities vs. VIVA WINE GROUP |
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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