Correlation Between Chesapeake Utilities and STEEL DYNAMICS
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and STEEL DYNAMICS 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 STEEL DYNAMICS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and STEEL DYNAMICS, you can compare the effects of market volatilities on Chesapeake Utilities and STEEL DYNAMICS 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 STEEL DYNAMICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and STEEL DYNAMICS.
Diversification Opportunities for Chesapeake Utilities and STEEL DYNAMICS
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chesapeake and STEEL is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and STEEL DYNAMICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEEL DYNAMICS 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 STEEL DYNAMICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEEL DYNAMICS has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and STEEL DYNAMICS go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and STEEL DYNAMICS
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 1.44 times less return on investment than STEEL DYNAMICS. But when comparing it to its historical volatility, Chesapeake Utilities is 1.48 times less risky than STEEL DYNAMICS. It trades about 0.01 of its potential returns per unit of risk. STEEL DYNAMICS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 11,179 in STEEL DYNAMICS on October 10, 2024 and sell it today you would earn a total of 137.00 from holding STEEL DYNAMICS or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. STEEL DYNAMICS
Performance |
| Timeline |
| Chesapeake Utilities |
| STEEL DYNAMICS |
Chesapeake Utilities and STEEL DYNAMICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and STEEL DYNAMICS
The main advantage of trading using opposite Chesapeake Utilities and STEEL DYNAMICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, STEEL DYNAMICS 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 STEEL DYNAMICS will offset losses from the drop in STEEL DYNAMICS's long position.| Chesapeake Utilities vs. Naturgy Energy Group | Chesapeake Utilities vs. CenterPoint Energy | Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. ENN Energy Holdings |
| STEEL DYNAMICS vs. ETFS Coffee ETC | STEEL DYNAMICS vs. The Yokohama Rubber | STEEL DYNAMICS vs. APPLIED MATERIALS | STEEL DYNAMICS vs. Darden Restaurants |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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