Correlation Between Chevron Corp and BankFirst Capital
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and BankFirst Capital 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 BankFirst Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and BankFirst Capital, you can compare the effects of market volatilities on Chevron Corp and BankFirst Capital 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 BankFirst Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and BankFirst Capital.
Diversification Opportunities for Chevron Corp and BankFirst Capital
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chevron and BankFirst is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and BankFirst Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankFirst Capital 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 BankFirst Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankFirst Capital has no effect on the direction of Chevron Corp i.e., Chevron Corp and BankFirst Capital go up and down completely randomly.
Pair Corralation between Chevron Corp and BankFirst Capital
Considering the 90-day investment horizon Chevron Corp is expected to under-perform the BankFirst Capital. In addition to that, Chevron Corp is 2.17 times more volatile than BankFirst Capital. It trades about -0.05 of its total potential returns per unit of risk. BankFirst Capital is currently generating about -0.03 per unit of volatility. If you would invest 4,199 in BankFirst Capital on December 5, 2024 and sell it today you would lose (59.00) from holding BankFirst Capital or give up 1.41% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Chevron Corp vs. BankFirst Capital
Performance |
Timeline |
Chevron Corp |
BankFirst Capital |
Chevron Corp and BankFirst Capital Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Chevron Corp and BankFirst Capital
The main advantage of trading using opposite Chevron Corp and BankFirst Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, BankFirst Capital 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 BankFirst Capital will offset losses from the drop in BankFirst Capital's long position.Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Suncor Energy |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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