Correlation Between Chesapeake Energy and West High
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and West High 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 West High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and West High Yield, you can compare the effects of market volatilities on Chesapeake Energy and West High 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 West High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and West High.
Diversification Opportunities for Chesapeake Energy and West High
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and West is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and West High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West High Yield 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 West High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West High Yield has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and West High go up and down completely randomly.
Pair Corralation between Chesapeake Energy and West High
If you would invest 15.00 in West High Yield on August 25, 2024 and sell it today you would earn a total of 3.00 from holding West High Yield or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Chesapeake Energy vs. West High Yield
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| West High Yield |
Chesapeake Energy and West High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and West High
The main advantage of trading using opposite Chesapeake Energy and West High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, West High 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 West High will offset losses from the drop in West High's 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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