Correlation Between Chevron Corp and Airtel Africa
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Airtel Africa 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 Airtel Africa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Airtel Africa Plc, you can compare the effects of market volatilities on Chevron Corp and Airtel Africa 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 Airtel Africa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Airtel Africa.
Diversification Opportunities for Chevron Corp and Airtel Africa
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chevron and Airtel is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Airtel Africa Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airtel Africa Plc 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 are associated (or correlated) with Airtel Africa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airtel Africa Plc has no effect on the direction of Chevron Corp i.e., Chevron Corp and Airtel Africa go up and down completely randomly.
Pair Corralation between Chevron Corp and Airtel Africa
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.24 times more return on investment than Airtel Africa. However, Chevron Corp is 4.18 times less risky than Airtel Africa. It trades about 0.05 of its potential returns per unit of risk. Airtel Africa Plc is currently generating about 0.0 per unit of risk. If you would invest 14,300 in Chevron Corp on August 25, 2024 and sell it today you would earn a total of 1,936 from holding Chevron Corp or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. Airtel Africa Plc
Performance |
| Timeline |
| Chevron Corp |
| Airtel Africa Plc |
Chevron Corp and Airtel Africa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Airtel Africa
The main advantage of trading using opposite Chevron Corp and Airtel Africa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Airtel Africa 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 Airtel Africa will offset losses from the drop in Airtel Africa's long position.| Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Suncor Energy | Chevron Corp vs. Cenovus Energy | Chevron Corp vs. Petrleo Brasileiro SA |
| Airtel Africa vs. Vodafone Group PLC | Airtel Africa vs. KDDI Corp | Airtel Africa vs. Amrica Mvil, SAB | Airtel Africa vs. Singapore Telecommunications Limited |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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