Correlation Between Chesapeake Energy and Senior Connect
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Senior Connect 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 Senior Connect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Senior Connect Acquisition, you can compare the effects of market volatilities on Chesapeake Energy and Senior Connect 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 Senior Connect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Senior Connect.
Diversification Opportunities for Chesapeake Energy and Senior Connect
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Senior is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Senior Connect Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senior Connect Acqui 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 Senior Connect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senior Connect Acqui has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Senior Connect go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Senior Connect
Assuming the 90 days horizon Chesapeake Energy is expected to generate 0.11 times more return on investment than Senior Connect. However, Chesapeake Energy is 9.34 times less risky than Senior Connect. It trades about -0.02 of its potential returns per unit of risk. Senior Connect Acquisition is currently generating about -0.07 per unit of risk. If you would invest 8,532 in Chesapeake Energy on August 25, 2024 and sell it today you would lose (2,282) from holding Chesapeake Energy or give up 26.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 18.95% |
| Values | Daily Returns |
Chesapeake Energy vs. Senior Connect Acquisition
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Senior Connect Acqui |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chesapeake Energy and Senior Connect Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Senior Connect
The main advantage of trading using opposite Chesapeake Energy and Senior Connect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Senior Connect 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 Senior Connect will offset losses from the drop in Senior Connect's long position.| Chesapeake Energy vs. NGL Energy Partners | Chesapeake Energy vs. Global Partners LP | Chesapeake Energy vs. Crescent Energy Co |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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