Correlation Between Chevron Corp and 532457BZ0

Can any of the company-specific risk be diversified away by investing in both Chevron Corp and 532457BZ0 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 532457BZ0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chevron Corp and ELI LILLY AND, you can compare the effects of market volatilities on Chevron Corp and 532457BZ0 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 532457BZ0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and 532457BZ0.

Diversification Opportunities for Chevron Corp and 532457BZ0

0.38

Correlation Coefficient

Chevron Corp  532457BZ0

Weak diversification

The 3 months correlation between Chevron and 532457BZ0 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ELI LILLY AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELI LILLY AND 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 532457BZ0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELI LILLY AND has no effect on the direction of Chevron Corp i.e., Chevron Corp and 532457BZ0 go up and down completely randomly.

Pair Corralation between Chevron Corp and 532457BZ0

Considering the 90-day investment horizon Chevron Corp is expected to generate 2.27 times less return on investment than 532457BZ0. But when comparing it to its historical volatility, Chevron Corp is 6.28 times less risky than 532457BZ0. It trades about 0.9 of its potential returns per unit of risk. ELI LILLY AND is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  5,396  in ELI LILLY AND on October 22, 2024 and sell it today you would earn a total of  1,409  from holding ELI LILLY AND or generate 26.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.47%
Values	Daily Returns

Chevron Corp  vs.  ELI LILLY AND

Chevron Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ELI LILLY AND

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ELI LILLY AND are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, 532457BZ0 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chevron Corp and 532457BZ0

The main advantage of trading using opposite Chevron Corp and 532457BZ0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, 532457BZ0 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 532457BZ0 will offset losses from the drop in 532457BZ0's long position.

The idea behind Chevron Corp and ELI LILLY AND 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.