Correlation Between Chesapeake Utilities and Utilities Fund
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and Utilities Fund 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 Fund 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 Fund Class, you can compare the effects of market volatilities on Chesapeake Utilities and Utilities Fund 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 Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and Utilities Fund.
Diversification Opportunities for Chesapeake Utilities and Utilities Fund
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chesapeake and Utilities is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Utilities Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Utilities Fund Class 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 Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Utilities Fund Class has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Utilities Fund go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and Utilities Fund
Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 1.06 times less return on investment than Utilities Fund. In addition to that, Chesapeake Utilities is 1.36 times more volatile than Utilities Fund Class. It trades about 0.03 of its total potential returns per unit of risk. Utilities Fund Class is currently generating about 0.04 per unit of volatility. If you would invest 4,670 in Utilities Fund Class on September 3, 2024 and sell it today you would earn a total of 856.00 from holding Utilities Fund Class or generate 18.33% 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. Utilities Fund Class
Performance |
| Timeline |
| Chesapeake Utilities |
| Utilities Fund Class |
Chesapeake Utilities and Utilities Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chesapeake Utilities and Utilities Fund
The main advantage of trading using opposite Chesapeake Utilities and Utilities Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, Utilities Fund 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 Fund will offset losses from the drop in Utilities Fund's long position.| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
| Utilities Fund vs. Franklin Utilities Fund | Utilities Fund vs. Franklin Utilities Fund | Utilities Fund vs. Franklin Utilities | Utilities Fund vs. Franklin Utilities Fund |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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