Correlation Between One Gas and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both One Gas 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 One Gas and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between One Gas and Chesapeake Utilities, you can compare the effects of market volatilities on One Gas 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 One Gas with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of One Gas and Chesapeake Utilities.
Diversification Opportunities for One Gas and Chesapeake Utilities
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between One and Chesapeake is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding One Gas and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and One Gas 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 One Gas 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 One Gas i.e., One Gas and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between One Gas and Chesapeake Utilities
Considering the 90-day investment horizon One Gas is expected to generate 5.51 times less return on investment than Chesapeake Utilities. But when comparing it to its historical volatility, One Gas is 1.0 times less risky than Chesapeake Utilities. It trades about 0.0 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 11,231 in Chesapeake Utilities on September 22, 2024 and sell it today you would earn a total of 725.00 from holding Chesapeake Utilities or generate 6.46% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.8% |
Values | Daily Returns |
One Gas vs. Chesapeake Utilities
Performance |
Timeline |
One Gas |
Chesapeake Utilities |
One Gas and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with One Gas and Chesapeake Utilities
The main advantage of trading using opposite One Gas and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if One Gas 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.One Gas vs. NewJersey Resources | One Gas vs. Northwest Natural Gas | One Gas vs. Chesapeake Utilities | One Gas vs. UGI Corporation |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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