Correlation Between Chevron Corp and AXT
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and AXT 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 AXT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and AXT Inc, you can compare the effects of market volatilities on Chevron Corp and AXT 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 AXT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and AXT.
Diversification Opportunities for Chevron Corp and AXT
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chevron and AXT is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and AXT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AXT Inc 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 AXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AXT Inc has no effect on the direction of Chevron Corp i.e., Chevron Corp and AXT go up and down completely randomly.
Pair Corralation between Chevron Corp and AXT
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.22 times more return on investment than AXT. However, Chevron Corp is 4.48 times less risky than AXT. It trades about 0.41 of its potential returns per unit of risk. AXT Inc is currently generating about -0.24 per unit of risk. If you would invest 14,656 in Chevron Corp on August 31, 2024 and sell it today you would earn a total of 1,555 from holding Chevron Corp or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. AXT Inc
Performance |
| Timeline |
| Chevron Corp |
| AXT Inc |
Chevron Corp and AXT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and AXT
The main advantage of trading using opposite Chevron Corp and AXT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, AXT 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 AXT will offset losses from the drop in AXT'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 |
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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