Correlation Between Chesapeake Utilities and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and IMPERIAL TOBACCO , you can compare the effects of market volatilities on Chesapeake Utilities and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and IMPERIAL TOBACCO.
Diversification Opportunities for Chesapeake Utilities and IMPERIAL TOBACCO
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chesapeake and IMPERIAL is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and IMPERIAL TOBACCO
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 1.46 times less return on investment than IMPERIAL TOBACCO. In addition to that, Chesapeake Utilities is 1.16 times more volatile than IMPERIAL TOBACCO . It trades about 0.1 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about 0.16 per unit of volatility. If you would invest 2,044 in IMPERIAL TOBACCO on September 3, 2024 and sell it today you would earn a total of 1,035 from holding IMPERIAL TOBACCO or generate 50.64% 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. IMPERIAL TOBACCO
Performance |
| Timeline |
| Chesapeake Utilities |
| IMPERIAL TOBACCO |
Chesapeake Utilities and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and IMPERIAL TOBACCO
The main advantage of trading using opposite Chesapeake Utilities and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| Chesapeake Utilities vs. ENN Energy Holdings | Chesapeake Utilities vs. Superior Plus Corp | Chesapeake Utilities vs. NMI Holdings | Chesapeake Utilities vs. Origin Agritech |
| IMPERIAL TOBACCO vs. Gamma Communications plc | IMPERIAL TOBACCO vs. WisdomTree Investments | IMPERIAL TOBACCO vs. Strategic Investments AS | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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