Correlation Between Chesapeake Utilities and Prudential Utility
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Prudential Utility 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 Prudential Utility into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and Prudential Utility Fund, you can compare the effects of market volatilities on Chesapeake Utilities and Prudential Utility 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 Prudential Utility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Prudential Utility.
Diversification Opportunities for Chesapeake Utilities and Prudential Utility
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Prudential is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Prudential Utility Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Utility 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 Prudential Utility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Utility has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Prudential Utility go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Prudential Utility
Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 1.08 times less return on investment than Prudential Utility. In addition to that, Chesapeake Utilities is 1.28 times more volatile than Prudential Utility Fund. It trades about 0.09 of its total potential returns per unit of risk. Prudential Utility Fund is currently generating about 0.13 per unit of volatility. If you would invest 1,665 in Prudential Utility Fund on August 29, 2024 and sell it today you would earn a total of 99.00 from holding Prudential Utility Fund or generate 5.95% 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. Prudential Utility Fund
Performance |
| Timeline |
| Chesapeake Utilities |
| Prudential Utility |
Chesapeake Utilities and Prudential Utility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Prudential Utility
The main advantage of trading using opposite Chesapeake Utilities and Prudential Utility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Prudential Utility 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 Prudential Utility will offset losses from the drop in Prudential Utility's long position.| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
| Prudential Utility vs. Barings Active Short | Prudential Utility vs. Maryland Short Term Tax Free | Prudential Utility vs. Old Westbury Short Term | Prudential Utility vs. Siit Ultra Short |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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