Correlation Between Callon Petroleum and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Callon Petroleum 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 Callon Petroleum and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Callon Petroleum and Chesapeake Energy Corp, you can compare the effects of market volatilities on Callon Petroleum 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 Callon Petroleum with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Callon Petroleum and Chesapeake Energy.
Diversification Opportunities for Callon Petroleum and Chesapeake Energy
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Callon and Chesapeake is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Callon Petroleum and Chesapeake Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy Corp and Callon Petroleum 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 Callon Petroleum 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 Corp has no effect on the direction of Callon Petroleum i.e., Callon Petroleum and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Callon Petroleum and Chesapeake Energy
If you would invest 3,576 in Callon Petroleum on February 5, 2024 and sell it today you would earn a total of 0.00 from holding Callon Petroleum or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 4.55% |
Values | Daily Returns |
Callon Petroleum vs. Chesapeake Energy Corp
Performance |
Timeline |
Callon Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Chesapeake Energy Corp |
Callon Petroleum and Chesapeake Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Callon Petroleum and Chesapeake Energy
The main advantage of trading using opposite Callon Petroleum and Chesapeake Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Callon Petroleum 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.Callon Petroleum vs. SandRidge Energy | Callon Petroleum vs. SilverBow Resources | Callon Petroleum vs. Permian Resources | Callon Petroleum vs. Matador Resources |
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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