Correlation Between Chesapeake Energy and Quebec Precious

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

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

Diversification Opportunities for Chesapeake Energy and Quebec Precious

-0.42

Correlation Coefficient

Chesapeake Energy  Quebec Precious

Very good diversification

The 3 months correlation between Chesapeake and Quebec is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Quebec Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quebec Precious Metals and Chesapeake Energy 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 Energy are associated (or correlated) with Quebec Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quebec Precious Metals has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Quebec Precious go up and down completely randomly.

Pair Corralation between Chesapeake Energy and Quebec Precious

Assuming the 90 days horizon Chesapeake Energy is expected to generate 1.53 times less return on investment than Quebec Precious. But when comparing it to its historical volatility, Chesapeake Energy is 2.97 times less risky than Quebec Precious. It trades about 0.24 of its potential returns per unit of risk. Quebec Precious Metals is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Quebec Precious Metals on September 4, 2024 and sell it today you would earn a total of  1.00  from holding Quebec Precious Metals or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	33.33%
Values	Daily Returns

Chesapeake Energy  vs.  Quebec Precious Metals

Chesapeake Energy

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Chesapeake Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile technical and fundamental indicators, Chesapeake Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Quebec Precious Metals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Quebec Precious Metals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Quebec Precious reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chesapeake Energy and Quebec Precious

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

The idea behind Chesapeake Energy and Quebec Precious Metals 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.