Correlation Between Chevron Corp and Marsico Focus

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

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

Diversification Opportunities for Chevron Corp and Marsico Focus

-0.41

Correlation Coefficient

Chevron Corp  Marsico Focus

Very good diversification

The 3 months correlation between Chevron and Marsico is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Marsico Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marsico Focus 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 Marsico Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marsico Focus has no effect on the direction of Chevron Corp i.e., Chevron Corp and Marsico Focus go up and down completely randomly.

Pair Corralation between Chevron Corp and Marsico Focus

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.86 times more return on investment than Marsico Focus. However, Chevron Corp is 1.16 times less risky than Marsico Focus. It trades about 0.21 of its potential returns per unit of risk. Marsico Focus is currently generating about -0.1 per unit of risk. If you would invest  14,150  in Chevron Corp on December 29, 2024 and sell it today you would earn a total of  2,515  from holding Chevron Corp or generate 17.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Chevron Corp  vs.  Marsico Focus

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.

Marsico Focus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marsico Focus has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Chevron Corp and Marsico Focus

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

The idea behind Chevron Corp and Marsico Focus 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.