Correlation Between Chevron Corp and Fathom Nickel

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

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

Diversification Opportunities for Chevron Corp and Fathom Nickel

-0.81

Correlation Coefficient

Chevron Corp  Fathom Nickel

Pay attention - limited upside

The 3 months correlation between Chevron and Fathom is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Fathom Nickel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fathom Nickel 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 Fathom Nickel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fathom Nickel has no effect on the direction of Chevron Corp i.e., Chevron Corp and Fathom Nickel go up and down completely randomly.

Pair Corralation between Chevron Corp and Fathom Nickel

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.18 times more return on investment than Fathom Nickel. However, Chevron Corp is 5.5 times less risky than Fathom Nickel. It trades about 0.17 of its potential returns per unit of risk. Fathom Nickel is currently generating about -0.05 per unit of risk. If you would invest  14,320  in Chevron Corp on September 2, 2024 and sell it today you would earn a total of  1,873  from holding Chevron Corp or generate 13.08% return on investment over 90 days.

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

Chevron Corp  vs.  Fathom Nickel

Chevron Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fathom Nickel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fathom Nickel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Chevron Corp and Fathom Nickel

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

The idea behind Chevron Corp and Fathom Nickel 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.