Correlation Between Chevron Corp and WBI BullBear

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

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

Diversification Opportunities for Chevron Corp and WBI BullBear

0.73

Correlation Coefficient

Chevron Corp  WBI BullBear

Poor diversification

The 3 months correlation between Chevron and WBI is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and WBI BullBear Quality in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WBI BullBear Quality 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 WBI BullBear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WBI BullBear Quality has no effect on the direction of Chevron Corp i.e., Chevron Corp and WBI BullBear go up and down completely randomly.

Pair Corralation between Chevron Corp and WBI BullBear

Considering the 90-day investment horizon Chevron Corp is expected to under-perform the WBI BullBear. In addition to that, Chevron Corp is 1.06 times more volatile than WBI BullBear Quality. It trades about -0.44 of its total potential returns per unit of risk. WBI BullBear Quality is currently generating about -0.17 per unit of volatility. If you would invest  3,707  in WBI BullBear Quality on September 30, 2024 and sell it today you would lose (161.00) from holding WBI BullBear Quality or give up 4.34% of portfolio value over 90 days.

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

Chevron Corp  vs.  WBI BullBear Quality

Chevron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

WBI BullBear Quality

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WBI BullBear Quality are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, WBI BullBear is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Chevron Corp and WBI BullBear

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

The idea behind Chevron Corp and WBI BullBear Quality 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.