Correlation Between Chesapeake Utilities and OPAL Fuels
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and OPAL Fuels 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 OPAL Fuels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and OPAL Fuels, you can compare the effects of market volatilities on Chesapeake Utilities and OPAL Fuels 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 OPAL Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and OPAL Fuels.
Diversification Opportunities for Chesapeake Utilities and OPAL Fuels
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and OPAL is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and OPAL Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPAL Fuels 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 OPAL Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPAL Fuels has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and OPAL Fuels go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and OPAL Fuels
Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 0.62 times more return on investment than OPAL Fuels. However, Chesapeake Utilities is 1.62 times less risky than OPAL Fuels. It trades about 0.02 of its potential returns per unit of risk. OPAL Fuels is currently generating about -0.19 per unit of risk. If you would invest 12,400 in Chesapeake Utilities on November 8, 2024 and sell it today you would earn a total of 116.00 from holding Chesapeake Utilities or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chesapeake Utilities vs. OPAL Fuels
Performance |
| Timeline |
| Chesapeake Utilities |
| OPAL Fuels |
Chesapeake Utilities and OPAL Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and OPAL Fuels
The main advantage of trading using opposite Chesapeake Utilities and OPAL Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, OPAL Fuels 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 OPAL Fuels will offset losses from the drop in OPAL Fuels' long position.| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
| OPAL Fuels vs. Northwest Natural Gas | OPAL Fuels vs. Chesapeake Utilities | OPAL Fuels vs. One Gas | OPAL Fuels 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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