Correlation Between Chesapeake Utilities and Rai Way
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Rai Way 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 Rai Way into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Rai Way SpA, you can compare the effects of market volatilities on Chesapeake Utilities and Rai Way 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 Rai Way. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Rai Way.
Diversification Opportunities for Chesapeake Utilities and Rai Way
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and Rai is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Rai Way SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rai Way SpA 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 Rai Way. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rai Way SpA has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Rai Way go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Rai Way
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.87 times more return on investment than Rai Way. However, Chesapeake Utilities is 1.15 times less risky than Rai Way. It trades about 0.1 of its potential returns per unit of risk. Rai Way SpA is currently generating about 0.03 per unit of risk. If you would invest 9,134 in Chesapeake Utilities on September 4, 2024 and sell it today you would earn a total of 3,266 from holding Chesapeake Utilities or generate 35.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Rai Way SpA
Performance |
| Timeline |
| Chesapeake Utilities |
| Rai Way SpA |
Chesapeake Utilities and Rai Way Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Rai Way
The main advantage of trading using opposite Chesapeake Utilities and Rai Way positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Rai Way 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 Rai Way will offset losses from the drop in Rai Way's long position.| Chesapeake Utilities vs. National Beverage Corp | Chesapeake Utilities vs. PREMIER FOODS | Chesapeake Utilities vs. Fevertree Drinks PLC | Chesapeake Utilities vs. MOLSON RS BEVERAGE |
| Rai Way vs. Chesapeake Utilities | Rai Way vs. Beijing Media | Rai Way vs. Townsquare Media | Rai Way vs. Universal Entertainment |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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