Correlation Between Chevron Corp and PepGen

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

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

Diversification Opportunities for Chevron Corp and PepGen

-0.65

Correlation Coefficient

Chevron Corp  PepGen

Excellent diversification

The 3 months correlation between Chevron and PepGen is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and PepGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepGen 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 PepGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepGen has no effect on the direction of Chevron Corp i.e., Chevron Corp and PepGen go up and down completely randomly.

Pair Corralation between Chevron Corp and PepGen

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.09 times more return on investment than PepGen. However, Chevron Corp is 11.12 times less risky than PepGen. It trades about 0.21 of its potential returns per unit of risk. PepGen is currently generating about -0.04 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	Weak
Accuracy	100.0%
Values	Daily Returns

Chevron Corp  vs.  PepGen

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.

PepGen

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Chevron Corp and PepGen

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

The idea behind Chevron Corp and PepGen 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.