Correlation Between Nasdaq and Chevron Corp

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

By analyzing existing cross correlation between Nasdaq Inc and Chevron Corp CEDEAR, you can compare the effects of market volatilities on Nasdaq and Chevron Corp 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 Nasdaq with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Chevron Corp.

Diversification Opportunities for Nasdaq and Chevron Corp

0.19

Correlation Coefficient

Nasdaq  Chevron Corp

Average diversification

The 3 months correlation between Nasdaq and Chevron is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Chevron Corp CEDEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp CEDEAR and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp CEDEAR has no effect on the direction of Nasdaq i.e., Nasdaq and Chevron Corp go up and down completely randomly.

Pair Corralation between Nasdaq and Chevron Corp

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Chevron Corp. In addition to that, Nasdaq is 1.27 times more volatile than Chevron Corp CEDEAR. It trades about -0.1 of its total potential returns per unit of risk. Chevron Corp CEDEAR is currently generating about 0.35 per unit of volatility. If you would invest  1,112,500  in Chevron Corp CEDEAR on December 4, 2024 and sell it today you would earn a total of  95,000  from holding Chevron Corp CEDEAR or generate 8.54% return on investment over 90 days.

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

Nasdaq Inc  vs.  Chevron Corp CEDEAR

Nasdaq Inc

Risk-Adjusted Performance

Weak

Over the last 90 days Nasdaq Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Chevron Corp CEDEAR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp CEDEAR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nasdaq and Chevron Corp

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

The idea behind Nasdaq Inc and Chevron Corp CEDEAR 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.