Correlation Between SMA Solar and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both SMA Solar 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 SMA Solar and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMA Solar Technology and Chesapeake Utilities, you can compare the effects of market volatilities on SMA Solar 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 SMA Solar with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMA Solar and Chesapeake Utilities.
Diversification Opportunities for SMA Solar and Chesapeake Utilities
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between SMA and Chesapeake is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding SMA Solar Technology and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and SMA Solar 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 SMA Solar Technology 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 SMA Solar i.e., SMA Solar and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between SMA Solar and Chesapeake Utilities
Assuming the 90 days horizon SMA Solar Technology is expected to under-perform the Chesapeake Utilities. In addition to that, SMA Solar is 3.08 times more volatile than Chesapeake Utilities. It trades about 0.0 of its total potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.04 per unit of volatility. If you would invest 10,945 in Chesapeake Utilities on October 15, 2024 and sell it today you would earn a total of 355.00 from holding Chesapeake Utilities or generate 3.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SMA Solar Technology vs. Chesapeake Utilities
Performance |
| Timeline |
| SMA Solar Technology |
| Chesapeake Utilities |
SMA Solar and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMA Solar and Chesapeake Utilities
The main advantage of trading using opposite SMA Solar and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMA Solar 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.| SMA Solar vs. MOLSON RS BEVERAGE | SMA Solar vs. HOCHSCHILD MINING | SMA Solar vs. THAI BEVERAGE | SMA Solar vs. The Boston Beer |
| Chesapeake Utilities vs. Zoom Video Communications | Chesapeake Utilities vs. Charter Communications | Chesapeake Utilities vs. Comba Telecom Systems | Chesapeake Utilities vs. ecotel communication ag |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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