Correlation Between Amazon and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Amazon 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 Amazon and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Chevron Corp CEDEAR, you can compare the effects of market volatilities on Amazon 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 Amazon with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Chevron Corp.
Diversification Opportunities for Amazon and Chevron Corp
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Amazon and Chevron is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Amazon 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 Amazon 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 Amazon 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 Amazon i.e., Amazon and Chevron Corp go up and down completely randomly.
Pair Corralation between Amazon and Chevron Corp
Assuming the 90 days trading horizon Amazon is expected to generate 3.44 times less return on investment than Chevron Corp. In addition to that, Amazon is 2.38 times more volatile than Chevron Corp CEDEAR. It trades about 0.16 of its total potential returns per unit of risk. Chevron Corp CEDEAR is currently generating about 1.32 per unit of volatility. If you would invest 1,022,500 in Chevron Corp CEDEAR on October 20, 2024 and sell it today you would earn a total of 172,500 from holding Chevron Corp CEDEAR or generate 16.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Chevron Corp CEDEAR
Performance |
| Timeline |
| Amazon Inc |
| Chevron Corp CEDEAR |
Amazon and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Chevron Corp
The main advantage of trading using opposite Amazon and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon 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.| Amazon vs. Compania de Transporte | Amazon vs. Telecom Argentina | Amazon vs. Harmony Gold Mining | Amazon vs. Transportadora de Gas |
| Chevron Corp vs. Alibaba Group Holding | Chevron Corp vs. Apple Inc DRC | Chevron Corp vs. Alphabet Inc Class A CEDEAR | Chevron Corp vs. Amazon Inc |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |