Correlation Between Chesapeake Energy and Metallis Resources
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Metallis Resources 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 Metallis Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Metallis Resources, you can compare the effects of market volatilities on Chesapeake Energy and Metallis Resources 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 Metallis Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Metallis Resources.
Diversification Opportunities for Chesapeake Energy and Metallis Resources
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and Metallis is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Metallis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metallis Resources 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 Metallis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metallis Resources has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Metallis Resources go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Metallis Resources
Assuming the 90 days horizon Chesapeake Energy is expected to under-perform the Metallis Resources. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Energy is 3.31 times less risky than Metallis Resources. The stock trades about -0.08 of its potential returns per unit of risk. The Metallis Resources is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 9.30 in Metallis Resources on September 1, 2024 and sell it today you would earn a total of 9.70 from holding Metallis Resources or generate 104.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 66.93% |
| Values | Daily Returns |
Chesapeake Energy vs. Metallis Resources
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Metallis Resources |
Chesapeake Energy and Metallis Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Metallis Resources
The main advantage of trading using opposite Chesapeake Energy and Metallis Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Metallis Resources 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 Metallis Resources will offset losses from the drop in Metallis Resources' long position.| Chesapeake Energy vs. NGL Energy Partners | Chesapeake Energy vs. Global Partners LP | Chesapeake Energy vs. Crescent Energy Co |
| Metallis Resources vs. Macmahon Holdings Limited | Metallis Resources vs. Rokmaster Resources Corp | Metallis Resources vs. Hudson Resources | Metallis Resources vs. Thunder Gold Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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