Correlation Between Chesapeake Energy and Cascades
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Cascades 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 Cascades into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Cascades, you can compare the effects of market volatilities on Chesapeake Energy and Cascades 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 Cascades. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Cascades.
Diversification Opportunities for Chesapeake Energy and Cascades
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and Cascades is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Cascades in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cascades 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 Cascades. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cascades has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Cascades go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Cascades
Assuming the 90 days horizon Chesapeake Energy is expected to under-perform the Cascades. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Energy is 1.56 times less risky than Cascades. The stock trades about -0.02 of its potential returns per unit of risk. The Cascades is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 549.00 in Cascades on September 2, 2024 and sell it today you would earn a total of 294.00 from holding Cascades or generate 53.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.58% |
| Values | Daily Returns |
Chesapeake Energy vs. Cascades
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Cascades |
Chesapeake Energy and Cascades Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Cascades
The main advantage of trading using opposite Chesapeake Energy and Cascades positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Cascades 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 Cascades will offset losses from the drop in Cascades' long position.| Chesapeake Energy vs. NGL Energy Partners | Chesapeake Energy vs. Global Partners LP | Chesapeake Energy vs. Crescent Energy Co |
| Cascades vs. South32 Limited | Cascades vs. NioCorp Developments Ltd | Cascades vs. HUMANA INC | Cascades vs. SCOR PK |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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