Correlation Between Old Dominion and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Old Dominion 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 Old Dominion and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Old Dominion Freight and Chesapeake Energy, you can compare the effects of market volatilities on Old Dominion 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 Old Dominion with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Old Dominion and Chesapeake Energy.
Diversification Opportunities for Old Dominion and Chesapeake Energy
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Old and Chesapeake is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Old Dominion Freight and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and Old Dominion 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 Old Dominion Freight 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 Old Dominion i.e., Old Dominion and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Old Dominion and Chesapeake Energy
Given the investment horizon of 90 days Old Dominion Freight is expected to generate 1.08 times more return on investment than Chesapeake Energy. However, Old Dominion is 1.08 times more volatile than Chesapeake Energy. It trades about 0.04 of its potential returns per unit of risk. Chesapeake Energy is currently generating about 0.01 per unit of risk. If you would invest 19,531 in Old Dominion Freight on August 29, 2024 and sell it today you would earn a total of 2,850 from holding Old Dominion Freight or generate 14.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 80.86% |
| Values | Daily Returns |
Old Dominion Freight vs. Chesapeake Energy
Performance |
| Timeline |
| Old Dominion Freight |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Old Dominion and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Old Dominion and Chesapeake Energy
The main advantage of trading using opposite Old Dominion and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Old Dominion 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.| Old Dominion vs. ArcBest Corp | Old Dominion vs. Marten Transport | Old Dominion vs. Werner Enterprises | Old Dominion vs. Knight Transportation |
| Chesapeake Energy vs. Lindblad Expeditions Holdings | Chesapeake Energy vs. KVH Industries | Chesapeake Energy vs. Skillful Craftsman Education | Chesapeake Energy vs. Old Dominion Freight |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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