Correlation Between Chevron Corp and AFC Energy
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and AFC Energy 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 AFC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and AFC Energy plc, you can compare the effects of market volatilities on Chevron Corp and AFC Energy 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 AFC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and AFC Energy.
Diversification Opportunities for Chevron Corp and AFC Energy
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chevron and AFC is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and AFC Energy plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFC Energy 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 AFC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFC Energy plc has no effect on the direction of Chevron Corp i.e., Chevron Corp and AFC Energy go up and down completely randomly.
Pair Corralation between Chevron Corp and AFC Energy
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.22 times more return on investment than AFC Energy. However, Chevron Corp is 4.63 times less risky than AFC Energy. It trades about 0.04 of its potential returns per unit of risk. AFC Energy plc is currently generating about -0.09 per unit of risk. If you would invest 15,414 in Chevron Corp on August 31, 2024 and sell it today you would earn a total of 779.00 from holding Chevron Corp or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Chevron Corp vs. AFC Energy plc
Performance |
| Timeline |
| Chevron Corp |
| AFC Energy plc |
Chevron Corp and AFC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and AFC Energy
The main advantage of trading using opposite Chevron Corp and AFC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, AFC Energy 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 AFC Energy will offset losses from the drop in AFC Energy's long position.| Chevron Corp vs. RLJ Lodging Trust | Chevron Corp vs. Aquagold International | Chevron Corp vs. Stepstone Group | Chevron Corp vs. Morningstar Unconstrained Allocation |
| AFC Energy vs. Legrand SA ADR | AFC Energy vs. Loop Energy | AFC Energy vs. Sunrise New Energy | AFC Energy vs. Alfen NV |
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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