Correlation Between Chesapeake Energy and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Dow Jones 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 Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Dow Jones Industrial, you can compare the effects of market volatilities on Chesapeake Energy and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Dow Jones.
Diversification Opportunities for Chesapeake Energy and Dow Jones
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and Dow is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Dow Jones go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Dow Jones
Assuming the 90 days horizon Chesapeake Energy is expected to under-perform the Dow Jones. In addition to that, Chesapeake Energy is 3.54 times more volatile than Dow Jones Industrial. It trades about -0.08 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.16 per unit of volatility. If you would invest 3,857,103 in Dow Jones Industrial on September 1, 2024 and sell it today you would earn a total of 633,962 from holding Dow Jones Industrial or generate 16.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 67.46% |
| Values | Daily Returns |
Chesapeake Energy vs. Dow Jones Industrial
Performance |
| Timeline |
Chesapeake Energy and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Chesapeake Energy
Pair trading matchups for Chesapeake Energy
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Chesapeake Energy and Dow Jones
The main advantage of trading using opposite Chesapeake Energy and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Chesapeake Energy vs. NGL Energy Partners | Chesapeake Energy vs. Global Partners LP | Chesapeake Energy vs. Crescent Energy Co |
| Dow Jones vs. Catalyst Pharmaceuticals | Dow Jones vs. Sphere Entertainment Co | Dow Jones vs. National CineMedia | Dow Jones vs. Mink Therapeutics |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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