Correlation Between New Fortress and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both New Fortress 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 New Fortress and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Fortress Energy and Chesapeake Utilities, you can compare the effects of market volatilities on New Fortress 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 New Fortress with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Fortress and Chesapeake Utilities.
Diversification Opportunities for New Fortress and Chesapeake Utilities
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Chesapeake is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding New Fortress Energy and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and New Fortress 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 New Fortress Energy 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 New Fortress i.e., New Fortress and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between New Fortress and Chesapeake Utilities
Considering the 90-day investment horizon New Fortress Energy is expected to under-perform the Chesapeake Utilities. In addition to that, New Fortress is 2.87 times more volatile than Chesapeake Utilities. It trades about -0.12 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.1 per unit of volatility. If you would invest 9,692 in Chesapeake Utilities on August 27, 2024 and sell it today you would earn a total of 3,540 from holding Chesapeake Utilities or generate 36.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Fortress Energy vs. Chesapeake Utilities
Performance |
| Timeline |
| New Fortress Energy |
| Chesapeake Utilities |
New Fortress and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Fortress and Chesapeake Utilities
The main advantage of trading using opposite New Fortress and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Fortress 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.| New Fortress vs. FLEX LNG | New Fortress vs. Coterra Energy | New Fortress vs. Golar LNG Limited | New Fortress vs. Excelerate Energy |
| Chesapeake Utilities vs. Northwest Natural Gas | Chesapeake Utilities vs. One Gas | Chesapeake Utilities vs. NewJersey Resources | Chesapeake Utilities vs. Spire Inc |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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