Correlation Between Chevron Corp and IShares MSCI

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

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

Diversification Opportunities for Chevron Corp and IShares MSCI

0.73

Correlation Coefficient

Chevron Corp  IShares MSCI

Poor diversification

The 3 months correlation between Chevron and IShares is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Chevron Corp i.e., Chevron Corp and IShares MSCI go up and down completely randomly.

Pair Corralation between Chevron Corp and IShares MSCI

Considering the 90-day investment horizon Chevron Corp is expected to under-perform the IShares MSCI. In addition to that, Chevron Corp is 1.47 times more volatile than iShares MSCI USA. It trades about -0.5 of its total potential returns per unit of risk. iShares MSCI USA is currently generating about -0.08 per unit of volatility. If you would invest  12,300  in iShares MSCI USA on September 21, 2024 and sell it today you would lose (188.00) from holding iShares MSCI USA or give up 1.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Chevron Corp  vs.  iShares MSCI USA

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.

iShares MSCI USA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI USA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound essential indicators, IShares MSCI is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Chevron Corp and IShares MSCI

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

The idea behind Chevron Corp and iShares MSCI USA 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.