Correlation Between Entravision Communications and Chesapeake Utilities
Can any of the company-specific risk be diversified away by investing in both Entravision Communications and Chesapeake Utilities 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 Entravision Communications and Chesapeake Utilities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Entravision Communications and Chesapeake Utilities, you can compare the effects of market volatilities on Entravision Communications and Chesapeake Utilities 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 Entravision Communications with a short position of Chesapeake Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entravision Communications and Chesapeake Utilities.
Diversification Opportunities for Entravision Communications and Chesapeake Utilities
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Entravision and Chesapeake is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Entravision Communications and Chesapeake Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Utilities and Entravision Communications 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 Entravision Communications are associated (or correlated) with Chesapeake Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Utilities has no effect on the direction of Entravision Communications i.e., Entravision Communications and Chesapeake Utilities go up and down completely randomly.
Pair Corralation between Entravision Communications and Chesapeake Utilities
Assuming the 90 days horizon Entravision Communications is expected to generate 2.59 times more return on investment than Chesapeake Utilities. However, Entravision Communications is 2.59 times more volatile than Chesapeake Utilities. It trades about 0.08 of its potential returns per unit of risk. Chesapeake Utilities is currently generating about 0.12 per unit of risk. If you would invest 203.00 in Entravision Communications on October 6, 2024 and sell it today you would earn a total of 19.00 from holding Entravision Communications or generate 9.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Entravision Communications vs. Chesapeake Utilities
Performance |
Timeline |
Entravision Communications |
Chesapeake Utilities |
Entravision Communications and Chesapeake Utilities Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Entravision Communications and Chesapeake Utilities
The main advantage of trading using opposite Entravision Communications and Chesapeake Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Entravision Communications position performs unexpectedly, Chesapeake Utilities 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 Chesapeake Utilities will offset losses from the drop in Chesapeake Utilities' long position.Entravision Communications vs. BW OFFSHORE LTD | Entravision Communications vs. DICKS Sporting Goods | Entravision Communications vs. SBM OFFSHORE | Entravision Communications vs. FUYO GENERAL LEASE |
Chesapeake Utilities vs. T MOBILE US | Chesapeake Utilities vs. REVO INSURANCE SPA | Chesapeake Utilities vs. JSC Halyk bank | Chesapeake Utilities vs. Erste Group Bank |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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