Correlation Between Chesapeake Utilities and ORMAT TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on Chesapeake Utilities and ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and ORMAT TECHNOLOGIES.
Diversification Opportunities for Chesapeake Utilities and ORMAT TECHNOLOGIES
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chesapeake and ORMAT is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and ORMAT TECHNOLOGIES go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and ORMAT TECHNOLOGIES
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.62 times more return on investment than ORMAT TECHNOLOGIES. However, Chesapeake Utilities is 1.61 times less risky than ORMAT TECHNOLOGIES. It trades about -0.28 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.35 per unit of risk. If you would invest 12,338 in Chesapeake Utilities on September 22, 2024 and sell it today you would lose (838.00) from holding Chesapeake Utilities or give up 6.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. ORMAT TECHNOLOGIES
Performance |
| Timeline |
| Chesapeake Utilities |
| ORMAT TECHNOLOGIES |
Chesapeake Utilities and ORMAT TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and ORMAT TECHNOLOGIES
The main advantage of trading using opposite Chesapeake Utilities and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, ORMAT TECHNOLOGIES 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 ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES's long position.| Chesapeake Utilities vs. CenterPoint Energy | Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. China Resources Gas | Chesapeake Utilities vs. APA Group |
| ORMAT TECHNOLOGIES vs. Chesapeake Utilities | ORMAT TECHNOLOGIES vs. ZURICH INSURANCE GROUP | ORMAT TECHNOLOGIES vs. Zurich Insurance Group | ORMAT TECHNOLOGIES vs. United Insurance Holdings |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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