Correlation Between Summit Materials and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Materials and Chesapeake Energy, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Chesapeake Energy.
Diversification Opportunities for Summit Materials and Chesapeake Energy
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Summit and Chesapeake is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Summit Materials and Chesapeake Energy
If you would invest 4,783 in Summit Materials on September 2, 2024 and sell it today you would earn a total of 311.00 from holding Summit Materials or generate 6.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Summit Materials vs. Chesapeake Energy
Performance |
| Timeline |
| Summit Materials |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
Summit Materials and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Materials and Chesapeake Energy
The main advantage of trading using opposite Summit Materials and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.| Summit Materials vs. Martin Marietta Materials | Summit Materials vs. Vulcan Materials | Summit Materials vs. James Hardie Industries | Summit Materials vs. Eagle Materials |
| Chesapeake Energy vs. Sphere Entertainment Co | Chesapeake Energy vs. Morgan Stanley | Chesapeake Energy vs. Nasdaq Inc | Chesapeake Energy vs. Alvarium Tiedemann 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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