Correlation Between Chesapeake Energy and Canfor
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Canfor 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 Canfor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Canfor, you can compare the effects of market volatilities on Chesapeake Energy and Canfor 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 Canfor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Canfor.
Diversification Opportunities for Chesapeake Energy and Canfor
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and Canfor is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Canfor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor 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 Canfor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Canfor go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Canfor
Assuming the 90 days horizon Chesapeake Energy is expected to generate 0.83 times more return on investment than Canfor. However, Chesapeake Energy is 1.2 times less risky than Canfor. It trades about 0.01 of its potential returns per unit of risk. Canfor is currently generating about -0.03 per unit of risk. If you would invest 6,500 in Chesapeake Energy on August 28, 2024 and sell it today you would lose (96.00) from holding Chesapeake Energy or give up 1.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 89.24% |
| Values | Daily Returns |
Chesapeake Energy vs. Canfor
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Canfor |
Chesapeake Energy and Canfor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Canfor
The main advantage of trading using opposite Chesapeake Energy and Canfor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Canfor 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 Canfor will offset losses from the drop in Canfor's long position.| Chesapeake Energy vs. Amgen Inc | Chesapeake Energy vs. Viemed Healthcare | Chesapeake Energy vs. Willamette Valley Vineyards | Chesapeake Energy vs. Microbot Medical |
| Canfor vs. Conifex Timber | Canfor vs. GreenFirst Forest Products | Canfor vs. West Fraser Timber | Canfor vs. Ufp Industries |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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