Correlation Between Chesapeake Energy and Playfair Mining
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Playfair Mining 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 Playfair Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Playfair Mining, you can compare the effects of market volatilities on Chesapeake Energy and Playfair Mining 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 Playfair Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Playfair Mining.
Diversification Opportunities for Chesapeake Energy and Playfair Mining
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Playfair is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Playfair Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Playfair Mining 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 Playfair Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Playfair Mining has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Playfair Mining go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Playfair Mining
If you would invest 0.51 in Playfair Mining on August 30, 2024 and sell it today you would earn a total of 0.59 from holding Playfair Mining or generate 115.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.35% |
| Values | Daily Returns |
Chesapeake Energy vs. Playfair Mining
Performance |
| Timeline |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Playfair Mining |
Chesapeake Energy and Playfair Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Energy and Playfair Mining
The main advantage of trading using opposite Chesapeake Energy and Playfair Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Playfair Mining 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 Playfair Mining will offset losses from the drop in Playfair Mining's long position.| Chesapeake Energy vs. Sapiens International | Chesapeake Energy vs. Nextplat Corp | Chesapeake Energy vs. Bill Com Holdings | Chesapeake Energy vs. Diamond Estates Wines |
| Playfair Mining vs. Silver Hammer Mining | Playfair Mining vs. Reyna Silver Corp | Playfair Mining vs. Guanajuato Silver | Playfair Mining vs. Silver One Resources |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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