Correlation Between Chevron Corp and Vodafone Group
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Vodafone Group 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 Corp and Vodafone Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Vodafone Group Plc, you can compare the effects of market volatilities on Chevron Corp and Vodafone Group 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 Corp with a short position of Vodafone Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Vodafone Group.
Diversification Opportunities for Chevron Corp and Vodafone Group
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chevron and Vodafone is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Vodafone Group Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodafone Group Plc and Chevron Corp 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 Corp are associated (or correlated) with Vodafone Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodafone Group Plc has no effect on the direction of Chevron Corp i.e., Chevron Corp and Vodafone Group go up and down completely randomly.
Pair Corralation between Chevron Corp and Vodafone Group
Assuming the 90 days trading horizon Chevron Corp is expected to under-perform the Vodafone Group. In addition to that, Chevron Corp is 1.36 times more volatile than Vodafone Group Plc. It trades about -0.43 of its total potential returns per unit of risk. Vodafone Group Plc is currently generating about -0.34 per unit of volatility. If you would invest 18,120 in Vodafone Group Plc on September 25, 2024 and sell it today you would lose (1,420) from holding Vodafone Group Plc or give up 7.84% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Chevron Corp vs. Vodafone Group Plc
Performance |
Timeline |
Chevron Corp |
Vodafone Group Plc |
Chevron Corp and Vodafone Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chevron Corp and Vodafone Group
The main advantage of trading using opposite Chevron Corp and Vodafone Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Vodafone Group 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 Vodafone Group will offset losses from the drop in Vodafone Group's long position.Chevron Corp vs. TotalEnergies SE | Chevron Corp vs. Petrleo Brasileiro SA | Chevron Corp vs. iShares Global Timber | Chevron Corp vs. Vanguard World |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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