Correlation Between Chesapeake Utilities and EverGen Infrastructure
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
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 91.3% |
Values | Daily Returns |
Chesapeake Utilities vs. EverGen Infrastructure Corp
Performance |
Timeline |
Chesapeake Utilities |
EverGen Infrastructure |
Chesapeake Utilities and EverGen Infrastructure Volatility Contrast
Predicted Return Density |
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.Chesapeake Utilities vs. Northwest Natural Gas | ||
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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