Correlation Between Chesapeake Utilities and PETCO HEALTH

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

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

Diversification Opportunities for Chesapeake Utilities and PETCO HEALTH

0.31

Correlation Coefficient

Chesapeake Utilities  PETCO HEALTH

Weak diversification

The 3 months correlation between Chesapeake and PETCO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Chesapeake Utilities and PETCO HEALTH CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETCO HEALTH CLA 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 PETCO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PETCO HEALTH CLA has no effect on the direction of Chesapeake Utilities i.e., Chesapeake Utilities and PETCO HEALTH go up and down completely randomly.

Pair Corralation between Chesapeake Utilities and PETCO HEALTH

Assuming the 90 days horizon Chesapeake Utilities is expected to under-perform the PETCO HEALTH. But the stock apears to be less risky and, when comparing its historical volatility, Chesapeake Utilities is 2.91 times less risky than PETCO HEALTH. The stock trades about -0.09 of its potential returns per unit of risk. The PETCO HEALTH CLA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  275.00  in PETCO HEALTH CLA on April 24, 2025 and sell it today you would lose (1.00) from holding PETCO HEALTH CLA or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chesapeake Utilities  vs.  PETCO HEALTH CLA

Chesapeake Utilities

Risk-Adjusted Performance

Very Weak

Over the last 90 days Chesapeake Utilities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PETCO HEALTH CLA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PETCO HEALTH CLA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PETCO HEALTH may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Chesapeake Utilities and PETCO HEALTH

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

The idea behind Chesapeake Utilities and PETCO HEALTH CLA 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.