Correlation Between Chesapeake Energy and Lucara Diamond
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Lucara Diamond 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 Lucara Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Lucara Diamond Corp, you can compare the effects of market volatilities on Chesapeake Energy and Lucara Diamond 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 Lucara Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Lucara Diamond.
Diversification Opportunities for Chesapeake Energy and Lucara Diamond
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and Lucara is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Lucara Diamond Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucara Diamond Corp 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 Lucara Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucara Diamond Corp has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Lucara Diamond go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Lucara Diamond
If you would invest 37.00 in Lucara Diamond Corp on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Lucara Diamond Corp or generate 0.0% 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. Lucara Diamond Corp
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Lucara Diamond Corp |
Chesapeake Energy and Lucara Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Lucara Diamond
The main advantage of trading using opposite Chesapeake Energy and Lucara Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Lucara Diamond 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 Lucara Diamond will offset losses from the drop in Lucara Diamond's long position.| Chesapeake Energy vs. AKITA Drilling | Chesapeake Energy vs. Precision Drilling | Chesapeake Energy vs. The Gap, | Chesapeake Energy vs. Burlington Stores |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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