Correlation Between Chesapeake Utilities and Bank Of
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Bank Of 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 Bank Of into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and The Bank of, you can compare the effects of market volatilities on Chesapeake Utilities and Bank Of 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 Bank Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Bank Of.
Diversification Opportunities for Chesapeake Utilities and Bank Of
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chesapeake and Bank is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and The Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Bank 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 Bank Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Bank has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Bank Of go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Bank Of
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 2.08 times less return on investment than Bank Of. But when comparing it to its historical volatility, Chesapeake Utilities is 1.1 times less risky than Bank Of. It trades about 0.09 of its potential returns per unit of risk. The Bank of is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,387 in The Bank of on September 22, 2024 and sell it today you would earn a total of 2,065 from holding The Bank of or generate 38.33% 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. The Bank of
Performance |
| Timeline |
| Chesapeake Utilities |
| The Bank |
Chesapeake Utilities and Bank Of Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Bank Of
The main advantage of trading using opposite Chesapeake Utilities and Bank Of positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Bank Of 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 Bank Of will offset losses from the drop in Bank Of's long position.| Chesapeake Utilities vs. Tradegate AG Wertpapierhandelsbank | Chesapeake Utilities vs. FUYO GENERAL LEASE | Chesapeake Utilities vs. National Bank Holdings | Chesapeake Utilities vs. The Hanover Insurance |
| Bank Of vs. Blackstone Group | Bank Of vs. Ameriprise Financial | Bank Of vs. State Street | Bank Of vs. T Rowe Price |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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