Correlation Between Chesapeake Utilities and Utilities Portfolio
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Utilities Portfolio 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 Utilities Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Utilities Portfolio Utilities, you can compare the effects of market volatilities on Chesapeake Utilities and Utilities Portfolio 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 Utilities Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Utilities Portfolio.
Diversification Opportunities for Chesapeake Utilities and Utilities Portfolio
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chesapeake and Utilities is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Utilities Portfolio Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Portfolio 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 Utilities Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Portfolio has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Utilities Portfolio go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Utilities Portfolio
Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 0.94 times more return on investment than Utilities Portfolio. However, Chesapeake Utilities is 1.06 times less risky than Utilities Portfolio. It trades about 0.12 of its potential returns per unit of risk. Utilities Portfolio Utilities is currently generating about 0.02 per unit of risk. If you would invest 11,835 in Chesapeake Utilities on November 5, 2024 and sell it today you would earn a total of 390.00 from holding Chesapeake Utilities or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Utilities Portfolio Utilities
Performance |
| Timeline |
| Chesapeake Utilities |
| Utilities Portfolio |
Chesapeake Utilities and Utilities Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Utilities Portfolio
The main advantage of trading using opposite Chesapeake Utilities and Utilities Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Utilities Portfolio 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 Utilities Portfolio will offset losses from the drop in Utilities Portfolio's long position.| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios |