Correlation Between CHEVRON CDR and Canadian Natural
Can any of the company-specific risk be diversified away by investing in both CHEVRON CDR and Canadian Natural 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 CHEVRON CDR and Canadian Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHEVRON CDR and Canadian Natural Resources, you can compare the effects of market volatilities on CHEVRON CDR and Canadian Natural 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 CHEVRON CDR with a short position of Canadian Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEVRON CDR and Canadian Natural.
Diversification Opportunities for CHEVRON CDR and Canadian Natural
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CHEVRON and Canadian is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CHEVRON CDR and Canadian Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Natural Res and CHEVRON CDR 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 CHEVRON CDR are associated (or correlated) with Canadian Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Natural Res has no effect on the direction of CHEVRON CDR i.e., CHEVRON CDR and Canadian Natural go up and down completely randomly.
Pair Corralation between CHEVRON CDR and Canadian Natural
Assuming the 90 days trading horizon CHEVRON CDR is expected to generate 0.71 times more return on investment than Canadian Natural. However, CHEVRON CDR is 1.41 times less risky than Canadian Natural. It trades about -0.16 of its potential returns per unit of risk. Canadian Natural Resources is currently generating about -0.15 per unit of risk. If you would invest 2,137 in CHEVRON CDR on September 15, 2024 and sell it today you would lose (83.00) from holding CHEVRON CDR or give up 3.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHEVRON CDR vs. Canadian Natural Resources
Performance |
| Timeline |
| CHEVRON CDR |
| Canadian Natural Res |
CHEVRON CDR and Canadian Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHEVRON CDR and Canadian Natural
The main advantage of trading using opposite CHEVRON CDR and Canadian Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEVRON CDR position performs unexpectedly, Canadian Natural 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 Canadian Natural will offset losses from the drop in Canadian Natural's long position.| CHEVRON CDR vs. Canadian Natural Resources | CHEVRON CDR vs. Suncor Energy | CHEVRON CDR vs. MEG Energy Corp | CHEVRON CDR vs. Baytex Energy Corp |
| Canadian Natural vs. Journey Energy | Canadian Natural vs. Yangarra Resources | Canadian Natural vs. Obsidian Energy | Canadian Natural vs. Pine Cliff Energy |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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