Correlation Between Chesapeake Utilities and Universal Insurance
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Universal Insurance 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 Universal Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Universal Insurance Holdings, you can compare the effects of market volatilities on Chesapeake Utilities and Universal Insurance 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 Universal Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Universal Insurance.
Diversification Opportunities for Chesapeake Utilities and Universal Insurance
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chesapeake and Universal is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Universal Insurance Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Insurance 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 Universal Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Insurance has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Universal Insurance go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Universal Insurance
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 1.0 times more return on investment than Universal Insurance. However, Chesapeake Utilities is 1.0 times less risky than Universal Insurance. It trades about 0.01 of its potential returns per unit of risk. Universal Insurance Holdings is currently generating about -0.08 per unit of risk. 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Universal Insurance Holdings
Performance |
| Timeline |
| Chesapeake Utilities |
| Universal Insurance |
Chesapeake Utilities and Universal Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Universal Insurance
The main advantage of trading using opposite Chesapeake Utilities and Universal Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Universal Insurance 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 Universal Insurance will offset losses from the drop in Universal Insurance's long position.| Chesapeake Utilities vs. Thai Beverage Public | Chesapeake Utilities vs. Monster Beverage Corp | Chesapeake Utilities vs. Suntory Beverage Food | Chesapeake Utilities vs. Perseus Mining Limited |
| Universal Insurance vs. Insurance Australia Group | Universal Insurance vs. Superior Plus Corp | Universal Insurance vs. SIVERS SEMICONDUCTORS AB | Universal Insurance vs. CHINA HUARONG ENERHD 50 |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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