Correlation Between Chevron Corp and 1st Colonial

Can any of the company-specific risk be diversified away by investing in both Chevron Corp and 1st Colonial 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 1st Colonial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chevron Corp and 1st Colonial Bancorp, you can compare the effects of market volatilities on Chevron Corp and 1st Colonial 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 1st Colonial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and 1st Colonial.

Diversification Opportunities for Chevron Corp and 1st Colonial

0.1

Correlation Coefficient

Chevron Corp  1st Colonial

Average diversification

The 3 months correlation between Chevron and 1st is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and 1st Colonial Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 1st Colonial Bancorp 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 1st Colonial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 1st Colonial Bancorp has no effect on the direction of Chevron Corp i.e., Chevron Corp and 1st Colonial go up and down completely randomly.

Pair Corralation between Chevron Corp and 1st Colonial

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.7 times more return on investment than 1st Colonial. However, Chevron Corp is 1.7 times more volatile than 1st Colonial Bancorp. It trades about 0.21 of its potential returns per unit of risk. 1st Colonial Bancorp is currently generating about 0.02 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chevron Corp  vs.  1st Colonial Bancorp

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.

1st Colonial Bancorp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 1st Colonial Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 1st Colonial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chevron Corp and 1st Colonial

The main advantage of trading using opposite Chevron Corp and 1st Colonial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, 1st Colonial 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 1st Colonial will offset losses from the drop in 1st Colonial's long position.

The idea behind Chevron Corp and 1st Colonial Bancorp 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.