Correlation Between AIR PRODCHEMICALS and Chevron
Can any of the company-specific risk be diversified away by investing in both AIR PRODCHEMICALS 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 AIR PRODCHEMICALS and Chevron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR PRODCHEMICALS and Chevron, you can compare the effects of market volatilities on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR PRODCHEMICALS and Chevron.
Diversification Opportunities for AIR PRODCHEMICALS and Chevron
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AIR and Chevron is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding AIR PRODCHEMICALS and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS i.e., AIR PRODCHEMICALS and Chevron go up and down completely randomly.
Pair Corralation between AIR PRODCHEMICALS and Chevron
Assuming the 90 days trading horizon AIR PRODCHEMICALS is expected to under-perform the Chevron. In addition to that, AIR PRODCHEMICALS is 1.2 times more volatile than Chevron. It trades about -0.1 of its total potential returns per unit of risk. Chevron is currently generating about 0.04 per unit of volatility. If you would invest 14,792 in Chevron on November 28, 2024 and sell it today you would earn a total of 132.00 from holding Chevron or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
AIR PRODCHEMICALS vs. Chevron
Performance |
| Timeline |
| AIR PRODCHEMICALS |
| Chevron |
AIR PRODCHEMICALS and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR PRODCHEMICALS and Chevron
The main advantage of trading using opposite AIR PRODCHEMICALS and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR PRODCHEMICALS 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.| AIR PRODCHEMICALS vs. BII Railway Transportation | AIR PRODCHEMICALS vs. DICKS Sporting Goods | AIR PRODCHEMICALS vs. Meli Hotels International | AIR PRODCHEMICALS vs. MELIA HOTELS |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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