Correlation Between CHEVRON CDR and OrganiGram Holdings

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

By analyzing existing cross correlation between CHEVRON CDR and OrganiGram Holdings, you can compare the effects of market volatilities on CHEVRON CDR and OrganiGram Holdings 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 OrganiGram Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEVRON CDR and OrganiGram Holdings.

Diversification Opportunities for CHEVRON CDR and OrganiGram Holdings

-0.57

Correlation Coefficient

CHEVRON CDR  OrganiGram Holdings

Excellent diversification

The 3 months correlation between CHEVRON and OrganiGram is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding CHEVRON CDR and OrganiGram Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OrganiGram Holdings 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 OrganiGram Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OrganiGram Holdings has no effect on the direction of CHEVRON CDR i.e., CHEVRON CDR and OrganiGram Holdings go up and down completely randomly.

Pair Corralation between CHEVRON CDR and OrganiGram Holdings

Assuming the 90 days trading horizon CHEVRON CDR is expected to generate 0.28 times more return on investment than OrganiGram Holdings. However, CHEVRON CDR is 3.6 times less risky than OrganiGram Holdings. It trades about 0.0 of its potential returns per unit of risk. OrganiGram Holdings is currently generating about -0.01 per unit of risk. If you would invest  2,040  in CHEVRON CDR on October 4, 2024 and sell it today you would lose (108.00) from holding CHEVRON CDR or give up 5.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.7%
Values	Daily Returns

CHEVRON CDR  vs.  OrganiGram Holdings

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

OrganiGram Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OrganiGram Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, OrganiGram Holdings is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CHEVRON CDR and OrganiGram Holdings

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

The idea behind CHEVRON CDR and OrganiGram Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.