Correlation Between Chesapeake Energy and Chase

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Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Chase 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 Chase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Chase, you can compare the effects of market volatilities on Chesapeake Energy and Chase 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 Chase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Chase.

Diversification Opportunities for Chesapeake Energy and Chase

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Chesapeake and Chase is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Chase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chase 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 Chase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chase has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Chase go up and down completely randomly.

Pair Corralation between Chesapeake Energy and Chase

If you would invest  12,576  in Chase on August 29, 2024 and sell it today you would earn a total of  0.00  from holding Chase or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Chesapeake Energy  vs.  Chase

 Performance 
       Timeline  
Chesapeake Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Chesapeake Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly unfluctuating technical and fundamental indicators, Chesapeake Energy showed solid returns over the last few months and may actually be approaching a breakup point.
Chase 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Chase has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Chase is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Chesapeake Energy and Chase Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chesapeake Energy and Chase

The main advantage of trading using opposite Chesapeake Energy and Chase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Chase 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 Chase will offset losses from the drop in Chase's long position.
The idea behind Chesapeake Energy and Chase pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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