Correlation Between Chesapeake Utilities and Sysco Corp

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

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

Diversification Opportunities for Chesapeake Utilities and Sysco Corp

-0.2

Correlation Coefficient

Chesapeake Utilities  Sysco Corp

Good diversification

The 3 months correlation between Chesapeake and Sysco is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Sysco Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco Corp 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 Sysco Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco Corp has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Sysco Corp go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and Sysco Corp

Assuming the 90 days horizon Chesapeake Utilities is expected to generate 0.84 times more return on investment than Sysco Corp. However, Chesapeake Utilities is 1.19 times less risky than Sysco Corp. It trades about 0.03 of its potential returns per unit of risk. Sysco Corp is currently generating about -0.09 per unit of risk. If you would invest  11,341  in Chesapeake Utilities on December 22, 2024 and sell it today you would earn a total of  259.00  from holding Chesapeake Utilities or generate 2.28% 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.  Sysco Corp

Chesapeake Utilities

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Chesapeake Utilities is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sysco Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sysco Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Chesapeake Utilities and Sysco Corp

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

The idea behind Chesapeake Utilities and Sysco Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..