Correlation Between CHEVRON CDR and High Liner

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Can any of the company-specific risk be diversified away by investing in both CHEVRON CDR and High Liner 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 High Liner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEVRON CDR and High Liner Foods, you can compare the effects of market volatilities on CHEVRON CDR and High Liner 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 High Liner. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEVRON CDR and High Liner.

Diversification Opportunities for CHEVRON CDR and High Liner

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between CHEVRON and High is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding CHEVRON CDR and High Liner Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Liner Foods 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 High Liner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Liner Foods has no effect on the direction of CHEVRON CDR i.e., CHEVRON CDR and High Liner go up and down completely randomly.

Pair Corralation between CHEVRON CDR and High Liner

Assuming the 90 days trading horizon CHEVRON CDR is expected to generate 0.55 times more return on investment than High Liner. However, CHEVRON CDR is 1.82 times less risky than High Liner. It trades about 0.82 of its potential returns per unit of risk. High Liner Foods is currently generating about -0.14 per unit of risk. If you would invest  1,905  in CHEVRON CDR on October 22, 2024 and sell it today you would earn a total of  250.00  from holding CHEVRON CDR or generate 13.12% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CHEVRON CDR  vs.  High Liner Foods

 Performance 
       Timeline  
CHEVRON CDR 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in CHEVRON CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, CHEVRON CDR may actually be approaching a critical reversion point that can send shares even higher in February 2025.
High Liner Foods 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in High Liner Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, High Liner displayed solid returns over the last few months and may actually be approaching a breakup point.

CHEVRON CDR and High Liner Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CHEVRON CDR and High Liner

The main advantage of trading using opposite CHEVRON CDR and High Liner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEVRON CDR position performs unexpectedly, High Liner 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 High Liner will offset losses from the drop in High Liner's long position.
The idea behind CHEVRON CDR and High Liner Foods 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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