Correlation Between Chevron Corp and Walt Disney
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Walt Disney 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 Corp and Walt Disney into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp CEDEAR and Walt Disney, you can compare the effects of market volatilities on Chevron Corp and Walt Disney 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 Corp with a short position of Walt Disney. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Walt Disney.
Diversification Opportunities for Chevron Corp and Walt Disney
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chevron and Walt is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp CEDEAR and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney and Chevron Corp 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 Corp CEDEAR are associated (or correlated) with Walt Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Chevron Corp i.e., Chevron Corp and Walt Disney go up and down completely randomly.
Pair Corralation between Chevron Corp and Walt Disney
Assuming the 90 days trading horizon Chevron Corp CEDEAR is expected to under-perform the Walt Disney. But the stock apears to be less risky and, when comparing its historical volatility, Chevron Corp CEDEAR is 1.03 times less risky than Walt Disney. The stock trades about -0.01 of its potential returns per unit of risk. The Walt Disney is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 969,000 in Walt Disney on November 2, 2024 and sell it today you would earn a total of 153,500 from holding Walt Disney or generate 15.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp CEDEAR vs. Walt Disney
Performance |
| Timeline |
| Chevron Corp CEDEAR |
| Walt Disney |
Chevron Corp and Walt Disney Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Walt Disney
The main advantage of trading using opposite Chevron Corp and Walt Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Walt Disney 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 Walt Disney will offset losses from the drop in Walt Disney's long position.| Chevron Corp vs. Agrometal SAI | Chevron Corp vs. United States Steel | Chevron Corp vs. Capex SA | Chevron Corp vs. Pfizer Inc |
| Walt Disney vs. United States Steel | Walt Disney vs. Agrometal SAI | Walt Disney vs. Transportadora de Gas | Walt Disney vs. Harmony Gold Mining |
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 Channel module to use Commodity Channel Index to analyze current equity momentum.
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