Correlation Between Chesapeake Utilities and Applied Materials
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Applied Materials 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 Applied Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Applied Materials, you can compare the effects of market volatilities on Chesapeake Utilities and Applied Materials 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 Applied Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Applied Materials.
Diversification Opportunities for Chesapeake Utilities and Applied Materials
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chesapeake and Applied is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Applied Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Materials 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 Applied Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Materials has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Applied Materials go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Applied Materials
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.52 times more return on investment than Applied Materials. However, Chesapeake Utilities is 1.92 times less risky than Applied Materials. It trades about 0.08 of its potential returns per unit of risk. Applied Materials is currently generating about 0.03 per unit of risk. If you would invest 10,491 in Chesapeake Utilities on November 2, 2024 and sell it today you would earn a total of 1,209 from holding Chesapeake Utilities or generate 11.52% 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. Applied Materials
Performance |
| Timeline |
| Chesapeake Utilities |
| Applied Materials |
Chesapeake Utilities and Applied Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Applied Materials
The main advantage of trading using opposite Chesapeake Utilities and Applied Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Applied Materials 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 Applied Materials will offset losses from the drop in Applied Materials' long position.| Chesapeake Utilities vs. THAI BEVERAGE | Chesapeake Utilities vs. TRAVEL LEISURE DL 01 | Chesapeake Utilities vs. LG Display Co | Chesapeake Utilities vs. Tsingtao Brewery |
| Applied Materials vs. HEALTHSTREAM | Applied Materials vs. ARDAGH METAL PACDL 0001 | Applied Materials vs. CLOVER HEALTH INV | Applied Materials vs. GREENX METALS LTD |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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