Correlation Between Chevron Corp and BNY Mellon

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

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

Diversification Opportunities for Chevron Corp and BNY Mellon

0.71

Correlation Coefficient

Chevron Corp  BNY Mellon

Poor diversification

The 3 months correlation between Chevron and BNY is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and BNY Mellon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNY Mellon International 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 BNY Mellon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNY Mellon International has no effect on the direction of Chevron Corp i.e., Chevron Corp and BNY Mellon go up and down completely randomly.

Pair Corralation between Chevron Corp and BNY Mellon

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.55 times more return on investment than BNY Mellon. However, Chevron Corp is 1.55 times more volatile than BNY Mellon International. It trades about 0.21 of its potential returns per unit of risk. BNY Mellon International is currently generating about 0.15 per unit of risk. If you would invest  14,242  in Chevron Corp on December 27, 2024 and sell it today you would earn a total of  2,555  from holding Chevron Corp or generate 17.94% return on investment over 90 days.

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

Chevron Corp  vs.  BNY Mellon International

Chevron Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chevron Corp showed solid returns over the last few months and may actually be approaching a breakup point.

BNY Mellon International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BNY Mellon International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating forward indicators, BNY Mellon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Chevron Corp and BNY Mellon

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

The idea behind Chevron Corp and BNY Mellon International 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..