Correlation Between SWISS WATER and Chevron
Can any of the company-specific risk be diversified away by investing in both SWISS WATER 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 SWISS WATER and Chevron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and Chevron, you can compare the effects of market volatilities on SWISS WATER 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 SWISS WATER with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and Chevron.
Diversification Opportunities for SWISS WATER and Chevron
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SWISS and Chevron is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and SWISS WATER 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 SWISS WATER DECAFFCOFFEE 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 SWISS WATER i.e., SWISS WATER and Chevron go up and down completely randomly.
Pair Corralation between SWISS WATER and Chevron
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to generate 1.96 times more return on investment than Chevron. However, SWISS WATER is 1.96 times more volatile than Chevron. It trades about 0.07 of its potential returns per unit of risk. Chevron is currently generating about 0.01 per unit of risk. If you would invest 177.00 in SWISS WATER DECAFFCOFFEE on September 4, 2024 and sell it today you would earn a total of 95.00 from holding SWISS WATER DECAFFCOFFEE or generate 53.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.66% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. Chevron
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| Chevron |
SWISS WATER and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and Chevron
The main advantage of trading using opposite SWISS WATER and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER 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.| SWISS WATER vs. Nestl SA | SWISS WATER vs. Kraft Heinz Co | SWISS WATER vs. General Mills | SWISS WATER vs. Kellogg Company |
| Chevron vs. Aozora Bank | Chevron vs. Dairy Farm International | Chevron vs. Siamgas And Petrochemicals | Chevron vs. Sterling Construction |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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