Correlation Between Caseys General and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Caseys General and Chesapeake Utilities 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 Caseys General and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caseys General Stores and Chesapeake Utilities, you can compare the effects of market volatilities on Caseys General and Chesapeake Utilities 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 Caseys General with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and Chesapeake Utilities.
Diversification Opportunities for Caseys General and Chesapeake Utilities
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Caseys and Chesapeake is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Caseys General 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 Caseys General Stores are associated (or correlated) with Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Caseys General i.e., Caseys General and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Caseys General and Chesapeake Utilities
Assuming the 90 days trading horizon Caseys General Stores is expected to generate 1.62 times more return on investment than Chesapeake Utilities. However, Caseys General is 1.62 times more volatile than Chesapeake Utilities. It trades about 0.1 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.11 per unit of risk. If you would invest 38,552 in Caseys General Stores on November 28, 2024 and sell it today you would earn a total of 1,448 from holding Caseys General Stores or generate 3.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caseys General Stores vs. Chesapeake Utilities
Performance |
| Timeline |
| Caseys General Stores |
| Chesapeake Utilities |
Caseys General and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caseys General and Chesapeake Utilities
The main advantage of trading using opposite Caseys General and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caseys General position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.| Caseys General vs. Planet Fitness | Caseys General vs. CARDINAL HEALTH | Caseys General vs. Mitsui Chemicals | Caseys General vs. CyberArk Software |
| Chesapeake Utilities vs. Autohome | Chesapeake Utilities vs. PRECISION DRILLING P | Chesapeake Utilities vs. PLAYMATES HLDGS NEW | Chesapeake Utilities vs. SHELF DRILLING LTD |
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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