Correlation Between Precision Drilling and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Precision Drilling 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 Precision Drilling and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Precision Drilling and Chesapeake Energy, you can compare the effects of market volatilities on Precision Drilling 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 Precision Drilling with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Precision Drilling and Chesapeake Energy.
Diversification Opportunities for Precision Drilling and Chesapeake Energy
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Precision and Chesapeake is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Precision Drilling and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and Precision Drilling 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 Precision Drilling 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 Precision Drilling i.e., Precision Drilling and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Precision Drilling and Chesapeake Energy
If you would invest 6,404 in Chesapeake Energy on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Chesapeake Energy or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Precision Drilling vs. Chesapeake Energy
Performance |
| Timeline |
| Precision Drilling |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
Precision Drilling and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Precision Drilling and Chesapeake Energy
The main advantage of trading using opposite Precision Drilling and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Precision Drilling 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.| Precision Drilling vs. Nabors Industries | Precision Drilling vs. Borr Drilling | Precision Drilling vs. Transocean | Precision Drilling vs. Helmerich and Payne |
| Chesapeake Energy vs. Steven Madden | Chesapeake Energy vs. The Joint Corp | Chesapeake Energy vs. Under Armour C | Chesapeake Energy vs. Xtant Medical Holdings |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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