Correlation Between Chevron Corp and IndexIQ
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and IndexIQ 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 IndexIQ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and IndexIQ, you can compare the effects of market volatilities on Chevron Corp and IndexIQ 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 IndexIQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and IndexIQ.
Diversification Opportunities for Chevron Corp and IndexIQ
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and IndexIQ is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and IndexIQ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ 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 IndexIQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ has no effect on the direction of Chevron Corp i.e., Chevron Corp and IndexIQ go up and down completely randomly.
Pair Corralation between Chevron Corp and IndexIQ
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 Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Chevron Corp vs. IndexIQ
Performance |
| Timeline |
| Chevron Corp |
| IndexIQ |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chevron Corp and IndexIQ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and IndexIQ
The main advantage of trading using opposite Chevron Corp and IndexIQ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, IndexIQ 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 IndexIQ will offset losses from the drop in IndexIQ'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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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