Correlation Between Chesapeake Utilities and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and NXP Semiconductors 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 NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and NXP Semiconductors NV, you can compare the effects of market volatilities on Chesapeake Utilities and NXP Semiconductors 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 NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and NXP Semiconductors.
Diversification Opportunities for Chesapeake Utilities and NXP Semiconductors
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and NXP is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors 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 NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and NXP Semiconductors
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.59 times more return on investment than NXP Semiconductors. However, Chesapeake Utilities is 1.71 times less risky than NXP Semiconductors. It trades about 0.14 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.0 per unit of risk. If you would invest 9,236 in Chesapeake Utilities on August 27, 2024 and sell it today you would earn a total of 3,364 from holding Chesapeake Utilities or generate 36.42% 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. NXP Semiconductors NV
Performance |
| Timeline |
| Chesapeake Utilities |
| NXP Semiconductors |
Chesapeake Utilities and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and NXP Semiconductors
The main advantage of trading using opposite Chesapeake Utilities and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, NXP Semiconductors 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 NXP Semiconductors will offset losses from the drop in NXP Semiconductors' long position.| Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. Superior Plus Corp | Chesapeake Utilities vs. NMI Holdings | Chesapeake Utilities vs. Origin Agritech |
| NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Microsoft |
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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