Correlation Between Chesapeake Utilities and Atmos Energy
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Atmos Energy 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 Utilities and Atmos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Atmos Energy, you can compare the effects of market volatilities on Chesapeake Utilities and Atmos Energy 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 Utilities with a short position of Atmos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Atmos Energy.
Diversification Opportunities for Chesapeake Utilities and Atmos Energy
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Atmos is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Atmos Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atmos Energy and Chesapeake Utilities 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 Utilities are associated (or correlated) with Atmos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atmos Energy has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Atmos Energy go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Atmos Energy
Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 1.45 times more return on investment than Atmos Energy. However, Chesapeake Utilities is 1.45 times more volatile than Atmos Energy. It trades about 0.24 of its potential returns per unit of risk. Atmos Energy is currently generating about 0.26 per unit of risk. If you would invest 12,085 in Chesapeake Utilities on August 23, 2024 and sell it today you would earn a total of 954.00 from holding Chesapeake Utilities or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Atmos Energy
Performance |
| Timeline |
| Chesapeake Utilities |
| Atmos Energy |
Chesapeake Utilities and Atmos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Atmos Energy
The main advantage of trading using opposite Chesapeake Utilities and Atmos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Atmos Energy 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 Atmos Energy will offset losses from the drop in Atmos Energy's long position.| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
| Atmos Energy vs. NewJersey Resources | Atmos Energy vs. One Gas | Atmos Energy vs. Northwest Natural Gas | Atmos Energy vs. Chesapeake Utilities |
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 Stocks Directory module to find actively traded stocks across global markets.
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