Correlation Between Chevron Corp and Appleseed Fund

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

By analyzing existing cross correlation between Chevron Corp and Appleseed Fund Appleseed, you can compare the effects of market volatilities on Chevron Corp and Appleseed Fund 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 Appleseed Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Appleseed Fund.

Diversification Opportunities for Chevron Corp and Appleseed Fund

0.57

Correlation Coefficient

Chevron Corp  Appleseed Fund

Very weak diversification

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

Pair Corralation between Chevron Corp and Appleseed Fund

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.65 times more return on investment than Appleseed Fund. However, Chevron Corp is 1.65 times more volatile than Appleseed Fund Appleseed. It trades about 0.2 of its potential returns per unit of risk. Appleseed Fund Appleseed is currently generating about 0.13 per unit of risk. If you would invest  14,140  in Chevron Corp on December 21, 2024 and sell it today you would earn a total of  2,335  from holding Chevron Corp or generate 16.51% return on investment over 90 days.

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

Chevron Corp  vs.  Appleseed Fund Appleseed

Chevron Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Chevron Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Appleseed Fund Appleseed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appleseed Fund Appleseed are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Appleseed Fund may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chevron Corp and Appleseed Fund

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

The idea behind Chevron Corp and Appleseed Fund Appleseed 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.