Correlation Between Earthstone Energy and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Earthstone Energy and Chesapeake Energy 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 Earthstone Energy and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Earthstone Energy and Chesapeake Energy, you can compare the effects of market volatilities on Earthstone Energy and Chesapeake Energy 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 Earthstone Energy with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Earthstone Energy and Chesapeake Energy.
Diversification Opportunities for Earthstone Energy and Chesapeake Energy
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Earthstone and Chesapeake is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Earthstone Energy and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and Earthstone Energy 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 Earthstone Energy are associated (or correlated) with Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of Earthstone Energy i.e., Earthstone Energy and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Earthstone Energy and Chesapeake Energy
If you would invest 8,146 in Chesapeake Energy on August 27, 2024 and sell it today you would earn a total of 0.00 from holding Chesapeake Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Earthstone Energy vs. Chesapeake Energy
Performance |
| Timeline |
| Earthstone Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Earthstone Energy and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Earthstone Energy and Chesapeake Energy
The main advantage of trading using opposite Earthstone Energy and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Earthstone Energy position performs unexpectedly, Chesapeake Energy 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 Energy will offset losses from the drop in Chesapeake Energy's long position.| Earthstone Energy vs. Vital Energy | Earthstone Energy vs. Comstock Resources | Earthstone Energy vs. Magnolia Oil Gas | Earthstone Energy vs. Obsidian Energy |
| Chesapeake Energy vs. Range Resources Corp | Chesapeake Energy vs. Antero Resources Corp | Chesapeake Energy vs. EQT Corporation | Chesapeake Energy vs. Comstock 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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