Correlation Between CBRE GROUP and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both CBRE GROUP 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 CBRE GROUP and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CBRE GROUP A and Chesapeake Utilities, you can compare the effects of market volatilities on CBRE GROUP 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 CBRE GROUP with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of CBRE GROUP and Chesapeake Utilities.
Diversification Opportunities for CBRE GROUP and Chesapeake Utilities
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CBRE and Chesapeake is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CBRE GROUP A and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and CBRE GROUP 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 CBRE GROUP A 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 CBRE GROUP i.e., CBRE GROUP and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between CBRE GROUP and Chesapeake Utilities
Assuming the 90 days trading horizon CBRE GROUP A is expected to generate 1.5 times more return on investment than Chesapeake Utilities. However, CBRE GROUP is 1.5 times more volatile than Chesapeake Utilities. It trades about 0.16 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.17 per unit of risk. If you would invest 11,100 in CBRE GROUP A on September 13, 2024 and sell it today you would earn a total of 1,800 from holding CBRE GROUP A or generate 16.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.73% |
| Values | Daily Returns |
CBRE GROUP A vs. Chesapeake Utilities
Performance |
| Timeline |
| CBRE GROUP A |
| Chesapeake Utilities |
CBRE GROUP and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CBRE GROUP and Chesapeake Utilities
The main advantage of trading using opposite CBRE GROUP and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CBRE GROUP 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.| CBRE GROUP vs. Chesapeake Utilities | CBRE GROUP vs. Singapore Reinsurance | CBRE GROUP vs. LANDSEA HOMES P | CBRE GROUP vs. United Insurance Holdings |
| Chesapeake Utilities vs. Naturgy Energy Group | Chesapeake Utilities vs. CenterPoint Energy | Chesapeake Utilities vs. Snam SpA | Chesapeake Utilities vs. ENN Energy 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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