Correlation Between PRECISION DRILLING and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING 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 PRECISION DRILLING and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PRECISION DRILLING P and Chesapeake Utilities, you can compare the effects of market volatilities on PRECISION DRILLING 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 PRECISION DRILLING with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and Chesapeake Utilities.
Diversification Opportunities for PRECISION DRILLING and Chesapeake Utilities
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between PRECISION and Chesapeake is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities 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 P 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 PRECISION DRILLING i.e., PRECISION DRILLING and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and Chesapeake Utilities
Assuming the 90 days trading horizon PRECISION DRILLING P is expected to under-perform the Chesapeake Utilities. In addition to that, PRECISION DRILLING is 1.88 times more volatile than Chesapeake Utilities. It trades about -0.08 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 11,800 in Chesapeake Utilities on September 12, 2024 and sell it today you would earn a total of 300.00 from holding Chesapeake Utilities or generate 2.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PRECISION DRILLING P vs. Chesapeake Utilities
Performance |
| Timeline |
| PRECISION DRILLING |
| Chesapeake Utilities |
PRECISION DRILLING and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and Chesapeake Utilities
The main advantage of trading using opposite PRECISION DRILLING and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING 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.| PRECISION DRILLING vs. Nabors Industries | PRECISION DRILLING vs. SHELF DRILLING LTD | PRECISION DRILLING vs. Daldrup Shne Aktiengesellschaft |
| Chesapeake Utilities vs. AIR PRODCHEMICALS | Chesapeake Utilities vs. National Storage Affiliates | Chesapeake Utilities vs. SHIN ETSU CHEMICAL | Chesapeake Utilities vs. X FAB Silicon Foundries |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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