Correlation Between Chesapeake Utilities and Grupo Aval
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Grupo Aval 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 Grupo Aval into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Grupo Aval Acciones, you can compare the effects of market volatilities on Chesapeake Utilities and Grupo Aval 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 Grupo Aval. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Grupo Aval.
Diversification Opportunities for Chesapeake Utilities and Grupo Aval
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chesapeake and Grupo is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Grupo Aval Acciones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval Acciones 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 Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval Acciones has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Grupo Aval go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Grupo Aval
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.83 times more return on investment than Grupo Aval. However, Chesapeake Utilities is 1.21 times less risky than Grupo Aval. It trades about 0.17 of its potential returns per unit of risk. Grupo Aval Acciones is currently generating about 0.06 per unit of risk. If you would invest 10,538 in Chesapeake Utilities on September 2, 2024 and sell it today you would earn a total of 1,762 from holding Chesapeake Utilities or generate 16.72% 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. Grupo Aval Acciones
Performance |
| Timeline |
| Chesapeake Utilities |
| Grupo Aval Acciones |
Chesapeake Utilities and Grupo Aval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Grupo Aval
The main advantage of trading using opposite Chesapeake Utilities and Grupo Aval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Grupo Aval 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 Grupo Aval will offset losses from the drop in Grupo Aval's long position.| Chesapeake Utilities vs. CenterPoint Energy | Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. Superior Plus Corp | Chesapeake Utilities vs. NMI Holdings |
| Grupo Aval vs. Westinghouse Air Brake | Grupo Aval vs. Norwegian Air Shuttle | Grupo Aval vs. MYFAIR GOLD P | Grupo Aval vs. Digilife Technologies Limited |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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