Correlation Between Chesapeake Energy and Silver One

Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Silver One 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 Chesapeake Energy and Silver One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chesapeake Energy and Silver One Resources, you can compare the effects of market volatilities on Chesapeake Energy and Silver One 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 Chesapeake Energy with a short position of Silver One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Silver One.

Diversification Opportunities for Chesapeake Energy and Silver One

0.83

Correlation Coefficient

Chesapeake Energy  Silver One

Very poor diversification

The 3 months correlation between Chesapeake and Silver is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Silver One Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver One Resources and Chesapeake Energy 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 Chesapeake Energy are associated (or correlated) with Silver One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver One Resources has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Silver One go up and down completely randomly.

Pair Corralation between Chesapeake Energy and Silver One

Assuming the 90 days horizon Chesapeake Energy is expected to under-perform the Silver One. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Energy is 9.95 times less risky than Silver One. The stock trades about -0.21 of its potential returns per unit of risk. The Silver One Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Silver One Resources on February 2, 2024 and sell it today you would earn a total of  1.00  from holding Silver One Resources or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Chesapeake Energy  vs.  Silver One Resources

Chesapeake Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Chesapeake Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Silver One Resources

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Silver One Resources are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Silver One reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Energy and Silver One

The main advantage of trading using opposite Chesapeake Energy and Silver One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Silver One 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 Silver One will offset losses from the drop in Silver One's long position.

The idea behind Chesapeake Energy and Silver One Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.