Correlation Between NYSE Composite and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Chesapeake Energy, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Chesapeake Energy.
Diversification Opportunities for NYSE Composite and Chesapeake Energy
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NYSE and Chesapeake is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and NYSE Composite 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 NYSE Composite 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 NYSE Composite i.e., NYSE Composite and Chesapeake Energy go up and down completely randomly.
Pair Corralation between NYSE Composite and Chesapeake Energy
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.3 times more return on investment than Chesapeake Energy. However, NYSE Composite is 3.3 times less risky than Chesapeake Energy. It trades about 0.08 of its potential returns per unit of risk. Chesapeake Energy is currently generating about -0.02 per unit of risk. If you would invest 1,529,105 in NYSE Composite on August 30, 2024 and sell it today you would earn a total of 491,877 from holding NYSE Composite or generate 32.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.92% |
| Values | Daily Returns |
NYSE Composite vs. Chesapeake Energy
Performance |
| Timeline |
NYSE Composite and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Chesapeake Energy
Pair trading matchups for Chesapeake Energy
Pair Trading with NYSE Composite and Chesapeake Energy
The main advantage of trading using opposite NYSE Composite and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Sphere Entertainment Co | NYSE Composite vs. Weibo Corp | NYSE Composite vs. BCE Inc | NYSE Composite vs. Pinterest |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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