Correlation Between Chesapeake Energy and Benton Resources
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Benton 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 Benton 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 Benton Resources, you can compare the effects of market volatilities on Chesapeake Energy and Benton 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 Benton Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Benton Resources.
Diversification Opportunities for Chesapeake Energy and Benton Resources
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and Benton is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Benton Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benton 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 Benton Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benton Resources has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Benton Resources go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Benton Resources
Assuming the 90 days horizon Chesapeake Energy is expected to under-perform the Benton Resources. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Energy is 7.01 times less risky than Benton Resources. The stock trades about -0.1 of its potential returns per unit of risk. The Benton Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8.56 in Benton Resources on September 1, 2024 and sell it today you would lose (3.56) from holding Benton Resources or give up 41.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 67.46% |
| Values | Daily Returns |
Chesapeake Energy vs. Benton Resources
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Benton Resources |
Chesapeake Energy and Benton Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Benton Resources
The main advantage of trading using opposite Chesapeake Energy and Benton Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Benton 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 Benton Resources will offset losses from the drop in Benton Resources' long position.| Chesapeake Energy vs. Vera Bradley | Chesapeake Energy vs. Ryanair Holdings PLC | Chesapeake Energy vs. Lindblad Expeditions Holdings | Chesapeake Energy vs. Rocky Brands |
| Benton Resources vs. Aurelia Metals Limited | Benton Resources vs. Artemis Resources | Benton Resources vs. Ascendant Resources | Benton Resources vs. Altiplano Metals |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |