Correlation Between Applied Blockchain and CHEVRON

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

By analyzing existing cross correlation between Applied Blockchain and CHEVRON P, you can compare the effects of market volatilities on Applied Blockchain and CHEVRON 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 Applied Blockchain with a short position of CHEVRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Blockchain and CHEVRON.

Diversification Opportunities for Applied Blockchain and CHEVRON

-0.56

Correlation Coefficient

Applied Blockchain  CHEVRON

Excellent diversification

The 3 months correlation between Applied and CHEVRON is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Applied Blockchain and CHEVRON P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHEVRON P and Applied Blockchain 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 Applied Blockchain are associated (or correlated) with CHEVRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHEVRON P has no effect on the direction of Applied Blockchain i.e., Applied Blockchain and CHEVRON go up and down completely randomly.

Pair Corralation between Applied Blockchain and CHEVRON

Given the investment horizon of 90 days Applied Blockchain is expected to generate 34.37 times more return on investment than CHEVRON. However, Applied Blockchain is 34.37 times more volatile than CHEVRON P. It trades about 0.04 of its potential returns per unit of risk. CHEVRON P is currently generating about 0.02 per unit of risk. If you would invest  773.00  in Applied Blockchain on September 12, 2024 and sell it today you would earn a total of  129.00  from holding Applied Blockchain or generate 16.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.43%
Values	Daily Returns

Applied Blockchain  vs.  CHEVRON P

Applied Blockchain

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Blockchain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Blockchain exhibited solid returns over the last few months and may actually be approaching a breakup point.

CHEVRON P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHEVRON P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, CHEVRON is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Applied Blockchain and CHEVRON

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

The idea behind Applied Blockchain and CHEVRON P 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.