Correlation Between Chesapeake Utilities and NiSource
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and NiSource 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 NiSource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and NiSource, you can compare the effects of market volatilities on Chesapeake Utilities and NiSource 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 NiSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and NiSource.
Diversification Opportunities for Chesapeake Utilities and NiSource
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chesapeake and NiSource is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and NiSource go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and NiSource
Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 1.27 times more return on investment than NiSource. However, Chesapeake Utilities is 1.27 times more volatile than NiSource. It trades about 0.28 of its potential returns per unit of risk. NiSource is currently generating about 0.32 per unit of risk. If you would invest 12,156 in Chesapeake Utilities on August 27, 2024 and sell it today you would earn a total of 1,076 from holding Chesapeake Utilities or generate 8.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. NiSource
Performance |
| Timeline |
| Chesapeake Utilities |
| NiSource |
Chesapeake Utilities and NiSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and NiSource
The main advantage of trading using opposite Chesapeake Utilities and NiSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, NiSource 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 NiSource will offset losses from the drop in NiSource's long position.| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
| NiSource vs. NewJersey Resources | NiSource vs. Northwest Natural Gas | NiSource vs. UGI Corporation | NiSource 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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