Correlation Between Chevron Corp and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Procter Gamble 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 Procter Gamble 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 Procter Gamble DRC, you can compare the effects of market volatilities on Chevron Corp and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Procter Gamble.
Diversification Opportunities for Chevron Corp and Procter Gamble
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chevron and Procter is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp CEDEAR and Procter Gamble DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble DRC 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble DRC has no effect on the direction of Chevron Corp i.e., Chevron Corp and Procter Gamble go up and down completely randomly.
Pair Corralation between Chevron Corp and Procter Gamble
Assuming the 90 days trading horizon Chevron Corp CEDEAR is expected to generate 1.05 times more return on investment than Procter Gamble. However, Chevron Corp is 1.05 times more volatile than Procter Gamble DRC. It trades about -0.01 of its potential returns per unit of risk. Procter Gamble DRC is currently generating about -0.09 per unit of risk. If you would invest 1,180,000 in Chevron Corp CEDEAR on November 2, 2024 and sell it today you would lose (22,500) from holding Chevron Corp CEDEAR or give up 1.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp CEDEAR vs. Procter Gamble DRC
Performance |
| Timeline |
| Chevron Corp CEDEAR |
| Procter Gamble DRC |
Chevron Corp and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Procter Gamble
The main advantage of trading using opposite Chevron Corp and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble's long position.| Chevron Corp vs. Agrometal SAI | Chevron Corp vs. United States Steel | Chevron Corp vs. Capex SA | Chevron Corp vs. Pfizer Inc |
| Procter Gamble vs. United States Steel | Procter Gamble vs. Harmony Gold Mining | Procter Gamble vs. Transportadora de Gas |
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..
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