Correlation Between Chesapeake Utilities and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Cal Maine 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 Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Cal Maine Foods, you can compare the effects of market volatilities on Chesapeake Utilities and Cal Maine 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 Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Cal Maine.
Diversification Opportunities for Chesapeake Utilities and Cal Maine
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Cal is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods 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 Cal Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Cal Maine go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Cal Maine
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 8.53 times less return on investment than Cal Maine. But when comparing it to its historical volatility, Chesapeake Utilities is 1.67 times less risky than Cal Maine. It trades about 0.05 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 6,638 in Cal Maine Foods on September 29, 2024 and sell it today you would earn a total of 3,086 from holding Cal Maine Foods or generate 46.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Cal Maine Foods
Performance |
| Timeline |
| Chesapeake Utilities |
| Cal Maine Foods |
Chesapeake Utilities and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Cal Maine
The main advantage of trading using opposite Chesapeake Utilities and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Cal Maine 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 Cal Maine will offset losses from the drop in Cal Maine's long position.| Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. Atmos Energy | Chesapeake Utilities vs. China Resources Gas | Chesapeake Utilities vs. Tokyo Gas CoLtd |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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