Correlation Between Chesapeake Energy and Glatfelter

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

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

Diversification Opportunities for Chesapeake Energy and Glatfelter

-0.41

Correlation Coefficient

Chesapeake Energy  Glatfelter

Very good diversification

The 3 months correlation between Chesapeake and Glatfelter is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Glatfelter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glatfelter 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 Glatfelter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glatfelter has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Glatfelter go up and down completely randomly.

Pair Corralation between Chesapeake Energy and Glatfelter

Assuming the 90 days horizon Chesapeake Energy is expected to generate 0.7 times more return on investment than Glatfelter. However, Chesapeake Energy is 1.43 times less risky than Glatfelter. It trades about 0.37 of its potential returns per unit of risk. Glatfelter is currently generating about 0.02 per unit of risk. If you would invest  5,684  in Chesapeake Energy on September 14, 2024 and sell it today you would earn a total of  720.00  from holding Chesapeake Energy or generate 12.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	35.14%
Values	Daily Returns

Chesapeake Energy  vs.  Glatfelter

Chesapeake Energy

Risk-Adjusted Performance

0 of 100

Strong

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 conflicting technical and fundamental indicators, Chesapeake Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Glatfelter

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Glatfelter has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Glatfelter is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chesapeake Energy and Glatfelter

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

The idea behind Chesapeake Energy and Glatfelter 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.