Correlation Between CHK Old and Diamondback Energy

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

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

Diversification Opportunities for CHK Old and Diamondback Energy

0.0

Correlation Coefficient

CHK Old  Diamondback Energy

Pay attention - limited upside

The 3 months correlation between CHK and Diamondback is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CHK Old and Diamondback Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamondback Energy and CHK Old 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 CHK Old are associated (or correlated) with Diamondback Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamondback Energy has no effect on the direction of CHK Old i.e., CHK Old and Diamondback Energy go up and down completely randomly.

Pair Corralation between CHK Old and Diamondback Energy

If you would invest  8,146  in CHK Old on October 9, 2024 and sell it today you would earn a total of  0.00  from holding CHK Old or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.64%
Values	Daily Returns

CHK Old  vs.  Diamondback Energy

CHK Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHK Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, CHK Old is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Diamondback Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diamondback Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with CHK Old and Diamondback Energy

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

The idea behind CHK Old and Diamondback Energy 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.