Correlation Between Chesapeake Utilities and COMPUTERSHARE
Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and COMPUTERSHARE 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 COMPUTERSHARE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Utilities and COMPUTERSHARE, you can compare the effects of market volatilities on Chesapeake Utilities and COMPUTERSHARE 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 COMPUTERSHARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and COMPUTERSHARE.
Diversification Opportunities for Chesapeake Utilities and COMPUTERSHARE
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chesapeake and COMPUTERSHARE is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and COMPUTERSHARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMPUTERSHARE 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 COMPUTERSHARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMPUTERSHARE has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and COMPUTERSHARE go up and down completely randomly.
Pair Corralation between Chesapeake Utilities and COMPUTERSHARE
Assuming the 90 days horizon Chesapeake Utilities is expected to under-perform the COMPUTERSHARE. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Utilities is 1.94 times less risky than COMPUTERSHARE. The stock trades about -0.04 of its potential returns per unit of risk. The COMPUTERSHARE is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,840 in COMPUTERSHARE on November 18, 2024 and sell it today you would earn a total of 720.00 from holding COMPUTERSHARE or generate 39.13% 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. COMPUTERSHARE
Performance |
Timeline |
Chesapeake Utilities |
COMPUTERSHARE |
Chesapeake Utilities and COMPUTERSHARE Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chesapeake Utilities and COMPUTERSHARE
The main advantage of trading using opposite Chesapeake Utilities and COMPUTERSHARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Utilities position performs unexpectedly, COMPUTERSHARE 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 COMPUTERSHARE will offset losses from the drop in COMPUTERSHARE's long position.Chesapeake Utilities vs. G III Apparel Group | ||
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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