Correlation Between Chevron Corp and BARRICK

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

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

Diversification Opportunities for Chevron Corp and BARRICK

-0.53

Correlation Coefficient

Chevron Corp  BARRICK

Excellent diversification

The 3 months correlation between Chevron and BARRICK is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and BARRICK NORTH AMER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BARRICK NORTH AMER 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 BARRICK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BARRICK NORTH AMER has no effect on the direction of Chevron Corp i.e., Chevron Corp and BARRICK go up and down completely randomly.

Pair Corralation between Chevron Corp and BARRICK

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.58 times more return on investment than BARRICK. However, Chevron Corp is 1.73 times less risky than BARRICK. It trades about 0.07 of its potential returns per unit of risk. BARRICK NORTH AMER is currently generating about -0.02 per unit of risk. If you would invest  14,251  in Chevron Corp on September 18, 2024 and sell it today you would earn a total of  685.00  from holding Chevron Corp or generate 4.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	85.71%
Values	Daily Returns

Chevron Corp  vs.  BARRICK NORTH AMER

Chevron Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 5 (%) 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.

BARRICK NORTH AMER

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BARRICK NORTH AMER has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BARRICK is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chevron Corp and BARRICK

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

The idea behind Chevron Corp and BARRICK NORTH AMER 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.