Correlation Between Chesapeake Utilities and Fidelity Advisor

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

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

Diversification Opportunities for Chesapeake Utilities and Fidelity Advisor

0.68

Correlation Coefficient

Chesapeake Utilities  Fidelity Advisor

Poor diversification

The 3 months correlation between Chesapeake and Fidelity is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and Fidelity Advisor Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Advisor Uti 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 Fidelity Advisor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Advisor Uti has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and Fidelity Advisor go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and Fidelity Advisor

Considering the 90-day investment horizon Chesapeake Utilities is expected to generate 1.04 times less return on investment than Fidelity Advisor. In addition to that, Chesapeake Utilities is 1.09 times more volatile than Fidelity Advisor Utilities. It trades about 0.04 of its total potential returns per unit of risk. Fidelity Advisor Utilities is currently generating about 0.05 per unit of volatility. If you would invest  4,502  in Fidelity Advisor Utilities on September 17, 2024 and sell it today you would earn a total of  139.00  from holding Fidelity Advisor Utilities or generate 3.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Chesapeake Utilities  vs.  Fidelity Advisor Utilities

Chesapeake Utilities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chesapeake Utilities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Chesapeake Utilities is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Fidelity Advisor Uti

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Advisor Utilities are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fidelity Advisor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chesapeake Utilities and Fidelity Advisor

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

The idea behind Chesapeake Utilities and Fidelity Advisor Utilities 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.