Correlation Between Chesapeake Energy and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Iridium Communications 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 Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Iridium Communications, you can compare the effects of market volatilities on Chesapeake Energy and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Iridium Communications.
Diversification Opportunities for Chesapeake Energy and Iridium Communications
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and Iridium is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Iridium Communications go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Iridium Communications
If you would invest 2,957 in Iridium Communications on September 4, 2024 and sell it today you would earn a total of 96.00 from holding Iridium Communications or generate 3.25% 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. Iridium Communications
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Iridium Communications |
Chesapeake Energy and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Iridium Communications
The main advantage of trading using opposite Chesapeake Energy and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| Chesapeake Energy vs. AKITA Drilling | Chesapeake Energy vs. Precision Drilling | Chesapeake Energy vs. The Gap, | Chesapeake Energy vs. Burlington Stores |
| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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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