Correlation Between Chesapeake Energy and Black Iron
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Black Iron 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 Black Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Black Iron, you can compare the effects of market volatilities on Chesapeake Energy and Black Iron 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 Black Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Black Iron.
Diversification Opportunities for Chesapeake Energy and Black Iron
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and Black is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Black Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Iron 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 Black Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Iron has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Black Iron go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Black Iron
If you would invest 3.60 in Black Iron on September 1, 2024 and sell it today you would earn a total of 2.20 from holding Black Iron or generate 61.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Chesapeake Energy vs. Black Iron
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Black Iron |
Chesapeake Energy and Black Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Black Iron
The main advantage of trading using opposite Chesapeake Energy and Black Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Black Iron 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 Black Iron will offset losses from the drop in Black Iron's long position.| Chesapeake Energy vs. Vera Bradley | Chesapeake Energy vs. Ryanair Holdings PLC | Chesapeake Energy vs. Lindblad Expeditions Holdings | Chesapeake Energy vs. Rocky Brands |
| Black Iron vs. South32 Limited | Black Iron vs. NioCorp Developments Ltd | Black Iron vs. HUMANA INC | Black Iron vs. SCOR PK |
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 Stocks Directory module to find actively traded stocks across global markets.
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