Correlation Between Chesapeake Utilities and LG Display
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and LG Display 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 LG Display into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and LG Display Co, you can compare the effects of market volatilities on Chesapeake Utilities and LG Display 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 LG Display. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and LG Display.
Diversification Opportunities for Chesapeake Utilities and LG Display
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and LGA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and LG Display Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Display 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 LG Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Display has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and LG Display go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and LG Display
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.6 times more return on investment than LG Display. However, Chesapeake Utilities is 1.68 times less risky than LG Display. It trades about 0.02 of its potential returns per unit of risk. LG Display Co is currently generating about -0.03 per unit of risk. If you would invest 10,820 in Chesapeake Utilities on September 29, 2024 and sell it today you would earn a total of 680.00 from holding Chesapeake Utilities or generate 6.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. LG Display Co
Performance |
| Timeline |
| Chesapeake Utilities |
| LG Display |
Chesapeake Utilities and LG Display Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and LG Display
The main advantage of trading using opposite Chesapeake Utilities and LG Display positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, LG Display 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 LG Display will offset losses from the drop in LG Display'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 |
| LG Display vs. Chesapeake Utilities | LG Display vs. Insurance Australia Group | LG Display vs. SBI Insurance Group | LG Display vs. UNITED UTILITIES GR |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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