Correlation Between Brooge Energy and Chesapeake Energy
Can any of the company-specific risk be diversified away by investing in both Brooge Energy and Chesapeake Energy 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 Brooge Energy and Chesapeake Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brooge Energy Limited and Chesapeake Energy, you can compare the effects of market volatilities on Brooge Energy and Chesapeake Energy 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 Brooge Energy with a short position of Chesapeake Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brooge Energy and Chesapeake Energy.
Diversification Opportunities for Brooge Energy and Chesapeake Energy
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brooge and Chesapeake is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brooge Energy Limited and Chesapeake Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chesapeake Energy and Brooge 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 Brooge Energy Limited are associated (or correlated) with Chesapeake Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chesapeake Energy has no effect on the direction of Brooge Energy i.e., Brooge Energy and Chesapeake Energy go up and down completely randomly.
Pair Corralation between Brooge Energy and Chesapeake Energy
Assuming the 90 days horizon Brooge Energy Limited is expected to generate 35.02 times more return on investment than Chesapeake Energy. However, Brooge Energy is 35.02 times more volatile than Chesapeake Energy. It trades about 0.15 of its potential returns per unit of risk. Chesapeake Energy is currently generating about 0.13 per unit of risk. If you would invest 0.65 in Brooge Energy Limited on March 6, 2024 and sell it today you would lose (0.13) from holding Brooge Energy Limited or give up 20.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 36.54% |
| Values | Daily Returns |
Brooge Energy Limited vs. Chesapeake Energy
Performance |
| Timeline |
| Brooge Energy Limited |
| Chesapeake Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Brooge Energy and Chesapeake Energy Volatility Contrast
Predicted Return Density |
| Returns |