Correlation Between Chesapeake Utilities and UGI Corp

Can any of the company-specific risk be diversified away by investing in both Chesapeake Utilities and UGI 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 UGI 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 UGI Corp Unit, you can compare the effects of market volatilities on Chesapeake Utilities and UGI 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 UGI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Utilities and UGI Corp.

Diversification Opportunities for Chesapeake Utilities and UGI Corp

-0.56

Correlation Coefficient

Chesapeake Utilities  UGI Corp

Excellent diversification

The 3 months correlation between Chesapeake and UGI is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and UGI Corp Unit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UGI Corp Unit 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 UGI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UGI Corp Unit has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and UGI Corp go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and UGI Corp

If you would invest  11,780  in Chesapeake Utilities on August 30, 2024 and sell it today you would earn a total of  1,398  from holding Chesapeake Utilities or generate 11.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Chesapeake Utilities  vs.  UGI Corp Unit

Chesapeake Utilities

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Chesapeake Utilities may actually be approaching a critical reversion point that can send shares even higher in December 2024.

UGI Corp Unit

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UGI Corp Unit has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, UGI Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Chesapeake Utilities and UGI Corp

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

The idea behind Chesapeake Utilities and UGI Corp Unit 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.