Correlation Between Chesapeake Energy and American Lithium
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and American Lithium 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 American Lithium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and American Lithium Minerals, you can compare the effects of market volatilities on Chesapeake Energy and American Lithium 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 American Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and American Lithium.
Diversification Opportunities for Chesapeake Energy and American Lithium
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and American is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and American Lithium Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Lithium Minerals 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 American Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Lithium Minerals has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and American Lithium go up and down completely randomly.
Pair Corralation between Chesapeake Energy and American Lithium
If you would invest 6,250 in Chesapeake Energy on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Chesapeake Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Chesapeake Energy vs. American Lithium Minerals
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| American Lithium Minerals |
Chesapeake Energy and American Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and American Lithium
The main advantage of trading using opposite Chesapeake Energy and American Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, American Lithium 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 American Lithium will offset losses from the drop in American Lithium's long position.| Chesapeake Energy vs. NGL Energy Partners | Chesapeake Energy vs. Global Partners LP | Chesapeake Energy vs. Crescent Energy Co |
| American Lithium vs. Applied Minerals | American Lithium vs. Artemis Resources | American Lithium vs. St Georges Eco Mining Corp | American Lithium vs. Atco Mining |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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