Correlation Between Chesapeake Energy and Kosmos Energy
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Kosmos Energy 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 Energy and Kosmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Kosmos Energy, you can compare the effects of market volatilities on Chesapeake Energy and Kosmos Energy 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 Energy with a short position of Kosmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Kosmos Energy.
Diversification Opportunities for Chesapeake Energy and Kosmos Energy
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Chesapeake and Kosmos is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Kosmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kosmos Energy and Chesapeake Energy 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 Energy are associated (or correlated) with Kosmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kosmos Energy has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Kosmos Energy go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Kosmos Energy
Considering the 90-day investment horizon Chesapeake Energy is expected to generate 0.55 times more return on investment than Kosmos Energy. However, Chesapeake Energy is 1.82 times less risky than Kosmos Energy. It trades about 0.01 of its potential returns per unit of risk. Kosmos Energy is currently generating about -0.05 per unit of risk. If you would invest 7,950 in Chesapeake Energy on August 26, 2024 and sell it today you would earn a total of 196.00 from holding Chesapeake Energy or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.59% |
| Values | Daily Returns |
Chesapeake Energy vs. Kosmos Energy
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Kosmos Energy |
Chesapeake Energy and Kosmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Kosmos Energy
The main advantage of trading using opposite Chesapeake Energy and Kosmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Kosmos Energy 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 Kosmos Energy will offset losses from the drop in Kosmos Energy's long position.| Chesapeake Energy vs. Range Resources Corp | Chesapeake Energy vs. Antero Resources Corp | Chesapeake Energy vs. EQT Corporation | Chesapeake Energy vs. Comstock Resources |
| Kosmos Energy vs. Devon Energy | Kosmos Energy vs. ConocoPhillips | Kosmos Energy vs. Diamondback Energy | Kosmos Energy vs. Occidental Petroleum |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Money Managers Screen money managers from public funds and ETFs managed around the world |