Correlation Between Chesapeake Utilities and AES

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

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

Diversification Opportunities for Chesapeake Utilities and AES

-0.3

Correlation Coefficient

Chesapeake Utilities  AES

Very good diversification

The 3 months correlation between Chesapeake and AES is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES and Chesapeake Utilities 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 Utilities are associated (or correlated) with AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and AES go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and AES

Considering the 90-day investment horizon Chesapeake Utilities is expected to under-perform the AES. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Utilities is 2.77 times less risky than AES. The stock trades about -0.1 of its potential returns per unit of risk. The The AES is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,026  in The AES on May 3, 2025 and sell it today you would earn a total of  289.00  from holding The AES or generate 28.17% return on investment over 90 days.

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

Chesapeake Utilities  vs.  The AES

Chesapeake Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chesapeake Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

AES

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, AES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Utilities and AES

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

The idea behind Chesapeake Utilities and The AES 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.

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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.