Correlation Between Chevron and Zebra Technologies

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

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

Diversification Opportunities for Chevron and Zebra Technologies

0.0

Correlation Coefficient

Chevron  Zebra Technologies

Pay attention - limited upside

The 3 months correlation between Chevron and Zebra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chevron and Zebra Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zebra Technologies and Chevron 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 are associated (or correlated) with Zebra Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zebra Technologies has no effect on the direction of Chevron i.e., Chevron and Zebra Technologies go up and down completely randomly.

Pair Corralation between Chevron and Zebra Technologies

Assuming the 90 days trading horizon Chevron is expected to generate 0.57 times more return on investment than Zebra Technologies. However, Chevron is 1.75 times less risky than Zebra Technologies. It trades about 0.07 of its potential returns per unit of risk. Zebra Technologies is currently generating about -0.19 per unit of risk. If you would invest  8,842  in Chevron on December 24, 2024 and sell it today you would earn a total of  554.00  from holding Chevron or generate 6.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chevron  vs.  Zebra Technologies

Chevron

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chevron may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Zebra Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zebra Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chevron and Zebra Technologies

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

The idea behind Chevron and Zebra Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.