Correlation Between Chesapeake Utilities and Northwest Natural
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Northwest Natural 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 Northwest Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Northwest Natural Gas, you can compare the effects of market volatilities on Chesapeake Utilities and Northwest Natural 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 Northwest Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Northwest Natural.
Diversification Opportunities for Chesapeake Utilities and Northwest Natural
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Chesapeake and Northwest is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Northwest Natural Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northwest Natural Gas 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 Northwest Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northwest Natural Gas has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Northwest Natural go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Northwest Natural
Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 1.02 times more return on investment than Northwest Natural. However, Chesapeake Utilities is 1.02 times more volatile than Northwest Natural Gas. It trades about 0.04 of its potential returns per unit of risk. Northwest Natural Gas is currently generating about 0.03 per unit of risk. If you would invest 11,685 in Chesapeake Utilities on November 2, 2024 and sell it today you would earn a total of 626.00 from holding Chesapeake Utilities or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. Northwest Natural Gas
Performance |
| Timeline |
| Chesapeake Utilities |
| Northwest Natural Gas |
Chesapeake Utilities and Northwest Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Northwest Natural
The main advantage of trading using opposite Chesapeake Utilities and Northwest Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Northwest Natural 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 Northwest Natural will offset losses from the drop in Northwest Natural's long position.| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
| Northwest Natural vs. Chesapeake Utilities | Northwest Natural vs. One Gas | Northwest Natural vs. NiSource | Northwest Natural vs. NewJersey Resources |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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