Correlation Between Chevron Corp and 91324PEN8

Can any of the company-specific risk be diversified away by investing in both Chevron Corp and 91324PEN8 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 91324PEN8 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chevron Corp and UNH 515 15 OCT 25, you can compare the effects of market volatilities on Chevron Corp and 91324PEN8 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 91324PEN8. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and 91324PEN8.

Diversification Opportunities for Chevron Corp and 91324PEN8

-0.54

Correlation Coefficient

Chevron Corp  91324PEN8

Excellent diversification

The 3 months correlation between Chevron and 91324PEN8 is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and UNH 515 15 OCT 25 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNH 515 15 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 91324PEN8. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNH 515 15 has no effect on the direction of Chevron Corp i.e., Chevron Corp and 91324PEN8 go up and down completely randomly.

Pair Corralation between Chevron Corp and 91324PEN8

Considering the 90-day investment horizon Chevron Corp is expected to under-perform the 91324PEN8. In addition to that, Chevron Corp is 9.54 times more volatile than UNH 515 15 OCT 25. It trades about -0.33 of its total potential returns per unit of risk. UNH 515 15 OCT 25 is currently generating about -0.08 per unit of volatility. If you would invest  10,076  in UNH 515 15 OCT 25 on September 18, 2024 and sell it today you would lose (20.00) from holding UNH 515 15 OCT 25 or give up 0.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chevron Corp  vs.  UNH 515 15 OCT 25

Chevron Corp

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 4 (%) 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.

UNH 515 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNH 515 15 OCT 25 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 91324PEN8 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chevron Corp and 91324PEN8

The main advantage of trading using opposite Chevron Corp and 91324PEN8 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, 91324PEN8 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 91324PEN8 will offset losses from the drop in 91324PEN8's long position.

The idea behind Chevron Corp and UNH 515 15 OCT 25 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.