Correlation Between Chesapeake Utilities and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Zurich Insurance 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 Zurich Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Zurich Insurance Group, you can compare the effects of market volatilities on Chesapeake Utilities and Zurich Insurance 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 Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Zurich Insurance.
Diversification Opportunities for Chesapeake Utilities and Zurich Insurance
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Zurich is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance 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 Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Zurich Insurance go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Zurich Insurance
Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.54 times more return on investment than Zurich Insurance. However, Chesapeake Utilities is 1.86 times less risky than Zurich Insurance. It trades about 0.21 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.03 per unit of risk. If you would invest 11,400 in Chesapeake Utilities on October 20, 2024 and sell it today you would earn a total of 500.00 from holding Chesapeake Utilities or generate 4.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Zurich Insurance Group
Performance |
| Timeline |
| Chesapeake Utilities |
| Zurich Insurance |
Chesapeake Utilities and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Zurich Insurance
The main advantage of trading using opposite Chesapeake Utilities and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance's long position.| Chesapeake Utilities vs. CVW CLEANTECH INC | Chesapeake Utilities vs. Alliance Data Systems | Chesapeake Utilities vs. CLEAN ENERGY FUELS | Chesapeake Utilities vs. VIVA WINE GROUP |
| Zurich Insurance vs. AEON METALS LTD | Zurich Insurance vs. Warner Music Group | Zurich Insurance vs. Nippon Light Metal | Zurich Insurance vs. FANDIFI TECHNOLOGY P |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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