Correlation Between Chevron Corp and American Eagle
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and American Eagle 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 American Eagle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and American Eagle Gold, you can compare the effects of market volatilities on Chevron Corp and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and American Eagle.
Diversification Opportunities for Chevron Corp and American Eagle
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chevron and American is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and American Eagle Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Gold 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Gold has no effect on the direction of Chevron Corp i.e., Chevron Corp and American Eagle go up and down completely randomly.
Pair Corralation between Chevron Corp and American Eagle
Considering the 90-day investment horizon Chevron Corp is expected to generate 5.0 times less return on investment than American Eagle. But when comparing it to its historical volatility, Chevron Corp is 5.75 times less risky than American Eagle. It trades about 0.29 of its potential returns per unit of risk. American Eagle Gold is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 51.00 in American Eagle Gold on September 3, 2024 and sell it today you would earn a total of 16.00 from holding American Eagle Gold or generate 31.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. American Eagle Gold
Performance |
| Timeline |
| Chevron Corp |
| American Eagle Gold |
Chevron Corp and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and American Eagle
The main advantage of trading using opposite Chevron Corp and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.The idea behind Chevron Corp and American Eagle Gold pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| American Eagle vs. Minnova Corp | American Eagle vs. Blue Star Gold | American Eagle vs. Advance Gold Corp | American Eagle vs. Argo Gold |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |