Correlation Between Chevron Corp and ProShares UltraPro

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

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

Diversification Opportunities for Chevron Corp and ProShares UltraPro

0.63

Correlation Coefficient

Chevron Corp  ProShares UltraPro

Poor diversification

The 3 months correlation between Chevron and ProShares is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short 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 ProShares UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of Chevron Corp i.e., Chevron Corp and ProShares UltraPro go up and down completely randomly.

Pair Corralation between Chevron Corp and ProShares UltraPro

Considering the 90-day investment horizon Chevron Corp is expected to under-perform the ProShares UltraPro. But the stock apears to be less risky and, when comparing its historical volatility, Chevron Corp is 2.15 times less risky than ProShares UltraPro. The stock trades about -0.33 of its potential returns per unit of risk. The ProShares UltraPro Short is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,593  in ProShares UltraPro Short on September 19, 2024 and sell it today you would lose (164.00) from holding ProShares UltraPro Short or give up 2.16% 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.  ProShares UltraPro Short

Chevron Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

ProShares UltraPro Short

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares UltraPro Short are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, ProShares UltraPro unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chevron Corp and ProShares UltraPro

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

The idea behind Chevron Corp and ProShares UltraPro Short 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.