Correlation Between Chevron Corp and EMLDW Old

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

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

Diversification Opportunities for Chevron Corp and EMLDW Old

0.53

Correlation Coefficient

Chevron Corp  EMLDW Old

Very weak diversification

The 3 months correlation between Chevron and EMLDW is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and EMLDW Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMLDW Old 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 EMLDW Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMLDW Old has no effect on the direction of Chevron Corp i.e., Chevron Corp and EMLDW Old go up and down completely randomly.

Pair Corralation between Chevron Corp and EMLDW Old

If you would invest  14,929  in Chevron Corp on October 25, 2024 and sell it today you would earn a total of  712.00  from holding Chevron Corp or generate 4.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Chevron Corp  vs.  EMLDW Old

Chevron Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

EMLDW Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMLDW Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, EMLDW Old is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Chevron Corp and EMLDW Old

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

The idea behind Chevron Corp and EMLDW Old 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.