Correlation Between X Financial and Chevron

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

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

Diversification Opportunities for X Financial and Chevron

0.1

Correlation Coefficient

X Financial  Chevron

Average diversification

The 3 months correlation between XYF and Chevron is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and X Financial 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 X Financial Class are associated (or correlated) with Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of X Financial i.e., X Financial and Chevron go up and down completely randomly.

Pair Corralation between X Financial and Chevron

Considering the 90-day investment horizon X Financial Class is expected to generate 2.54 times more return on investment than Chevron. However, X Financial is 2.54 times more volatile than Chevron. It trades about 0.1 of its potential returns per unit of risk. Chevron is currently generating about 0.01 per unit of risk. If you would invest  342.00  in X Financial Class on October 5, 2024 and sell it today you would earn a total of  506.00  from holding X Financial Class or generate 147.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.68%
Values	Daily Returns

X Financial Class  vs.  Chevron

X Financial Class

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chevron

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Chevron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Chevron is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with X Financial and Chevron

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

The idea behind X Financial Class and Chevron 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..