Correlation Between Popular and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Popular 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 Popular and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Popular and Chesapeake Utilities, you can compare the effects of market volatilities on Popular 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 Popular with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Popular and Chesapeake Utilities.
Diversification Opportunities for Popular and Chesapeake Utilities
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Popular and Chesapeake is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Popular and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Popular 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 Popular 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 Popular i.e., Popular and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Popular and Chesapeake Utilities
Assuming the 90 days trading horizon Popular is expected to generate 1.3 times more return on investment than Chesapeake Utilities. However, Popular is 1.3 times more volatile than Chesapeake Utilities. It trades about 0.09 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.01 per unit of risk. If you would invest 4,629 in Popular on December 4, 2024 and sell it today you would earn a total of 5,021 from holding Popular or generate 108.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Popular vs. Chesapeake Utilities
Performance |
| Timeline |
| Popular |
| Chesapeake Utilities |
Popular and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Popular and Chesapeake Utilities
The main advantage of trading using opposite Popular and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Popular 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.| Popular vs. GOME Retail Holdings | Popular vs. BURLINGTON STORES | Popular vs. Ross Stores | Popular vs. CARSALESCOM |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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