Correlation Between Chevron Corp and ProShares Ultra

Can any of the company-specific risk be diversified away by investing in both Chevron Corp and ProShares Ultra 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 Ultra 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 Ultra Semiconductors, you can compare the effects of market volatilities on Chevron Corp and ProShares Ultra 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 Ultra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and ProShares Ultra.

Diversification Opportunities for Chevron Corp and ProShares Ultra

-0.13

Correlation Coefficient

Chevron Corp  ProShares Ultra

Good diversification

The 3 months correlation between Chevron and ProShares is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ProShares Ultra Semiconductors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Ultra Semi 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 Ultra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Ultra Semi has no effect on the direction of Chevron Corp i.e., Chevron Corp and ProShares Ultra go up and down completely randomly.

Pair Corralation between Chevron Corp and ProShares Ultra

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.21 times more return on investment than ProShares Ultra. However, Chevron Corp is 4.88 times less risky than ProShares Ultra. It trades about 0.2 of its potential returns per unit of risk. ProShares Ultra Semiconductors is currently generating about -0.09 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  2,459  from holding Chevron Corp or generate 17.38% return on investment over 90 days.

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

Chevron Corp  vs.  ProShares Ultra Semiconductors

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.

ProShares Ultra Semi

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares Ultra Semiconductors has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with Chevron Corp and ProShares Ultra

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

The idea behind Chevron Corp and ProShares Ultra Semiconductors 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.