Correlation Between Chesapeake Energy and Sun Summit
Can any of the company-specific risk be diversified away by investing in both Chesapeake Energy and Sun Summit 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 Sun Summit into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chesapeake Energy and Sun Summit Minerals, you can compare the effects of market volatilities on Chesapeake Energy and Sun Summit 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 Sun Summit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chesapeake Energy and Sun Summit.
Diversification Opportunities for Chesapeake Energy and Sun Summit
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chesapeake and Sun is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Energy and Sun Summit Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Summit Minerals 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 Sun Summit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Summit Minerals has no effect on the direction of Chesapeake Energy i.e., Chesapeake Energy and Sun Summit go up and down completely randomly.
Pair Corralation between Chesapeake Energy and Sun Summit
Assuming the 90 days horizon Chesapeake Energy is expected to generate 0.2 times more return on investment than Sun Summit. However, Chesapeake Energy is 4.93 times less risky than Sun Summit. It trades about 0.15 of its potential returns per unit of risk. Sun Summit Minerals is currently generating about -0.04 per unit of risk. If you would invest 5,963 in Chesapeake Energy on August 30, 2024 and sell it today you would earn a total of 441.00 from holding Chesapeake Energy or generate 7.4% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 35.94% |
Values | Daily Returns |
Chesapeake Energy vs. Sun Summit Minerals
Performance |
Timeline |
Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Sun Summit Minerals |
Chesapeake Energy and Sun Summit Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chesapeake Energy and Sun Summit
The main advantage of trading using opposite Chesapeake Energy and Sun Summit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chesapeake Energy position performs unexpectedly, Sun Summit 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 Sun Summit will offset losses from the drop in Sun Summit's long position.Chesapeake Energy vs. Sapiens International | Chesapeake Energy vs. Nextplat Corp | Chesapeake Energy vs. Bill Com Holdings | Chesapeake Energy vs. Diamond Estates Wines |
Sun Summit vs. Silver Hammer Mining | Sun Summit vs. Reyna Silver Corp | Sun Summit vs. Guanajuato Silver | Sun Summit vs. Silver One Resources |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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