Correlation Between Chesapeake Energy and Macmahon Holdings
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Macmahon Holdings 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 Macmahon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Macmahon Holdings Limited, you can compare the effects of market volatilities on Chesapeake Energy and Macmahon Holdings 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 Macmahon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Macmahon Holdings.
Diversification Opportunities for Chesapeake Energy and Macmahon Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and Macmahon is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Macmahon Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macmahon Holdings 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 Macmahon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macmahon Holdings has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Macmahon Holdings go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Macmahon Holdings
If you would invest 25.00 in Macmahon Holdings Limited on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Macmahon Holdings Limited or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Chesapeake Energy vs. Macmahon Holdings Limited
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Macmahon Holdings |
Chesapeake Energy and Macmahon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Macmahon Holdings
The main advantage of trading using opposite Chesapeake Energy and Macmahon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Macmahon Holdings 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 Macmahon Holdings will offset losses from the drop in Macmahon Holdings' long position.| Chesapeake Energy vs. NGL Energy Partners | Chesapeake Energy vs. Global Partners LP | Chesapeake Energy vs. Crescent Energy Co |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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