Correlation Between Chesapeake Utilities and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Fevertree Drinks 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 Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Fevertree Drinks PLC, you can compare the effects of market volatilities on Chesapeake Utilities and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Fevertree Drinks.
Diversification Opportunities for Chesapeake Utilities and Fevertree Drinks
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chesapeake and Fevertree is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Fevertree Drinks PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks PLC 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks PLC has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Fevertree Drinks
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.63 times more return on investment than Fevertree Drinks. However, Chesapeake Utilities is 1.58 times less risky than Fevertree Drinks. It trades about 0.01 of its potential returns per unit of risk. Fevertree Drinks PLC is currently generating about -0.03 per unit of risk. If you would invest 11,011 in Chesapeake Utilities on November 1, 2024 and sell it today you would earn a total of 589.00 from holding Chesapeake Utilities or generate 5.35% 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. Fevertree Drinks PLC
Performance |
| Timeline |
| Chesapeake Utilities |
| Fevertree Drinks PLC |
Chesapeake Utilities and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Fevertree Drinks
The main advantage of trading using opposite Chesapeake Utilities and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Chesapeake Utilities vs. Carsales | Chesapeake Utilities vs. CODERE ONLINE LUX | Chesapeake Utilities vs. Warner Music Group | Chesapeake Utilities vs. CARSALESCOM |
| Fevertree Drinks vs. STGEORGE MINING LTD | Fevertree Drinks vs. MAGNUM MINING EXP | Fevertree Drinks vs. UNITED UTILITIES GR | Fevertree Drinks vs. Chesapeake Utilities |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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