Correlation Between HighPeak Energy and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both HighPeak 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 HighPeak 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 HighPeak Energy and Chesapeake Energy, you can compare the effects of market volatilities on HighPeak 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 HighPeak Energy with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of HighPeak Energy and Chesapeake Energy.
Diversification Opportunities for HighPeak Energy and Chesapeake Energy
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HighPeak and Chesapeake is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding HighPeak Energy and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and HighPeak 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 HighPeak 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 HighPeak Energy i.e., HighPeak Energy and Chesapeake Energy go up and down completely randomly.
Pair Corralation between HighPeak Energy and Chesapeake Energy
Assuming the 90 days horizon HighPeak Energy is expected to generate 3.61 times more return on investment than Chesapeake Energy. However, HighPeak Energy is 3.61 times more volatile than Chesapeake Energy. It trades about 0.08 of its potential returns per unit of risk. Chesapeake Energy is currently generating about 0.29 per unit of risk. If you would invest 424.00 in HighPeak Energy on August 26, 2024 and sell it today you would earn a total of 126.00 from holding HighPeak Energy or generate 29.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 41.54% |
| Values | Daily Returns |
HighPeak Energy vs. Chesapeake Energy
Performance |
| Timeline |
| HighPeak Energy |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
HighPeak Energy and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HighPeak Energy and Chesapeake Energy
The main advantage of trading using opposite HighPeak Energy and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HighPeak 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.The idea behind HighPeak Energy and Chesapeake Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Chesapeake Energy vs. NGL Energy Partners | Chesapeake Energy vs. Global Partners LP | Chesapeake Energy vs. Crescent Energy Co |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |