Correlation Between CHEVRON CDR and E L

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

By analyzing existing cross correlation between CHEVRON CDR and E L Financial 3, you can compare the effects of market volatilities on CHEVRON CDR and E L 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 CHEVRON CDR with a short position of E L. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEVRON CDR and E L.

Diversification Opportunities for CHEVRON CDR and E L

-0.78

Correlation Coefficient

CHEVRON CDR  E L

Pay attention - limited upside

The 3 months correlation between CHEVRON and ELF-PH is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding CHEVRON CDR and E L Financial 3 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E L Financial and CHEVRON CDR 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 CHEVRON CDR are associated (or correlated) with E L. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E L Financial has no effect on the direction of CHEVRON CDR i.e., CHEVRON CDR and E L go up and down completely randomly.

Pair Corralation between CHEVRON CDR and E L

Assuming the 90 days trading horizon CHEVRON CDR is expected to under-perform the E L. In addition to that, CHEVRON CDR is 2.49 times more volatile than E L Financial 3. It trades about -0.4 of its total potential returns per unit of risk. E L Financial 3 is currently generating about 0.22 per unit of volatility. If you would invest  2,219  in E L Financial 3 on September 21, 2024 and sell it today you would earn a total of  60.00  from holding E L Financial 3 or generate 2.7% return on investment over 90 days.

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

CHEVRON CDR  vs.  E L Financial 3

CHEVRON CDR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHEVRON CDR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CHEVRON CDR is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

E L Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days E L Financial 3 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, E L is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CHEVRON CDR and E L

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

The idea behind CHEVRON CDR and E L Financial 3 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 Transaction History module to view history of all your transactions and understand their impact on performance.