Correlation Between Chevron Corp and Hartford Small

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

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

Diversification Opportunities for Chevron Corp and Hartford Small

0.84

Correlation Coefficient

Chevron Corp  Hartford Small

Very poor diversification

The 3 months correlation between Chevron and Hartford is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Hartford Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small Cap 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 Hartford Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small Cap has no effect on the direction of Chevron Corp i.e., Chevron Corp and Hartford Small go up and down completely randomly.

Pair Corralation between Chevron Corp and Hartford Small

Considering the 90-day investment horizon Chevron Corp is expected to under-perform the Hartford Small. But the stock apears to be less risky and, when comparing its historical volatility, Chevron Corp is 1.22 times less risky than Hartford Small. The stock trades about -0.01 of its potential returns per unit of risk. The Hartford Small Cap is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,330  in Hartford Small Cap on October 7, 2024 and sell it today you would earn a total of  22.00  from holding Hartford Small Cap or generate 1.65% return on investment over 90 days.

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

Chevron Corp  vs.  Hartford Small Cap

Chevron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chevron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Hartford Small Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hartford Small Cap are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Hartford Small 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 Hartford Small

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

The idea behind Chevron Corp and Hartford Small Cap 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.