Correlation Between Chesapeake Utilities and EverGen Infrastructure

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Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and EverGen Infrastructure 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 EverGen Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and EverGen Infrastructure Corp, you can compare the effects of market volatilities on Chesapeake Utilities and EverGen Infrastructure 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 EverGen Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and EverGen Infrastructure.

Diversification Opportunities for Chesapeake Utilities and EverGen Infrastructure

ChesapeakeEverGenDiversified AwayChesapeakeEverGenDiversified Away100%
0.5
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Chesapeake and EverGen is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and EverGen Infrastructure Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EverGen Infrastructure 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 EverGen Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EverGen Infrastructure has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and EverGen Infrastructure go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and EverGen Infrastructure

Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 0.33 times more return on investment than EverGen Infrastructure. However, Chesapeake Utilities is 2.99 times less risky than EverGen Infrastructure. It trades about 0.12 of its potential returns per unit of risk. EverGen Infrastructure Corp is currently generating about -0.25 per unit of risk. If you would invest  12,088  in Chesapeake Utilities on November 24, 2024 and sell it today you would earn a total of  337.00  from holding Chesapeake Utilities or generate 2.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy91.3%
ValuesDaily Returns

Chesapeake Utilities  vs.  EverGen Infrastructure Corp

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -40-30-20-100
JavaScript chart by amCharts 3.21.15CPK EVGIF
       Timeline  
Chesapeake Utilities 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Chesapeake Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Chesapeake Utilities is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb115120125130
EverGen Infrastructure 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days EverGen Infrastructure Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.70.80.911.11.2

Chesapeake Utilities and EverGen Infrastructure Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.14-1.61-1.08-0.55-0.02680.481.011.542.072.6 0.050.100.150.20
JavaScript chart by amCharts 3.21.15CPK EVGIF
       Returns  

Pair Trading with Chesapeake Utilities and EverGen Infrastructure

The main advantage of trading using opposite Chesapeake Utilities and EverGen Infrastructure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, EverGen Infrastructure 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 EverGen Infrastructure will offset losses from the drop in EverGen Infrastructure's long position.
The idea behind Chesapeake Utilities and EverGen Infrastructure Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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