Correlation Between GeoPark and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both GeoPark 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 GeoPark and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GeoPark and Chesapeake Energy, you can compare the effects of market volatilities on GeoPark 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 GeoPark with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GeoPark and Chesapeake Energy.
Diversification Opportunities for GeoPark and Chesapeake Energy
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GeoPark and Chesapeake is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding GeoPark and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and GeoPark 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 GeoPark 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 GeoPark i.e., GeoPark and Chesapeake Energy go up and down completely randomly.
Pair Corralation between GeoPark and Chesapeake Energy
Given the investment horizon of 90 days GeoPark is expected to generate 4.9 times less return on investment than Chesapeake Energy. In addition to that, GeoPark is 1.51 times more volatile than Chesapeake Energy. It trades about 0.0 of its total potential returns per unit of risk. Chesapeake Energy is currently generating about 0.01 per unit of volatility. If you would invest 7,950 in Chesapeake Energy on August 26, 2024 and sell it today you would earn a total of 196.00 from holding Chesapeake Energy or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 88.59% |
| Values | Daily Returns |
GeoPark vs. Chesapeake Energy
Performance |
| Timeline |
| GeoPark |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
GeoPark and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GeoPark and Chesapeake Energy
The main advantage of trading using opposite GeoPark and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GeoPark 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.| GeoPark vs. Evolution Petroleum | GeoPark vs. Granite Ridge Resources | GeoPark vs. PHX Minerals | GeoPark vs. California Resources Corp |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |