Correlation Between Chesapeake Utilities and Benchmark Electronics
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Benchmark Electronics 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 Benchmark Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Benchmark Electronics, you can compare the effects of market volatilities on Chesapeake Utilities and Benchmark Electronics 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 Benchmark Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Benchmark Electronics.
Diversification Opportunities for Chesapeake Utilities and Benchmark Electronics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chesapeake and Benchmark is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Benchmark Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benchmark Electronics 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 Benchmark Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benchmark Electronics has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Benchmark Electronics go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Benchmark Electronics
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.73 times more return on investment than Benchmark Electronics. However, Chesapeake Utilities is 1.36 times less risky than Benchmark Electronics. It trades about 0.1 of its potential returns per unit of risk. Benchmark Electronics is currently generating about -0.23 per unit of risk. If you would invest 11,800 in Chesapeake Utilities on September 12, 2024 and sell it today you would earn a total of 300.00 from holding Chesapeake Utilities or generate 2.54% 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. Benchmark Electronics
Performance |
| Timeline |
| Chesapeake Utilities |
| Benchmark Electronics |
Chesapeake Utilities and Benchmark Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Benchmark Electronics
The main advantage of trading using opposite Chesapeake Utilities and Benchmark Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Benchmark Electronics 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 Benchmark Electronics will offset losses from the drop in Benchmark Electronics' long position.| Chesapeake Utilities vs. AIR PRODCHEMICALS | Chesapeake Utilities vs. National Storage Affiliates | Chesapeake Utilities vs. SHIN ETSU CHEMICAL | Chesapeake Utilities vs. X FAB Silicon Foundries |
| Benchmark Electronics vs. Meiko Electronics Co | Benchmark Electronics vs. Superior Plus Corp | Benchmark Electronics vs. SIVERS SEMICONDUCTORS AB | Benchmark Electronics vs. Norsk Hydro ASA |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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