Correlation Between Chevron Corp and Ampol
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Ampol 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 Ampol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Ampol Ltd ADR, you can compare the effects of market volatilities on Chevron Corp and Ampol 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 Ampol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Ampol.
Diversification Opportunities for Chevron Corp and Ampol
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chevron and Ampol is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Ampol Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol Ltd ADR 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 Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol Ltd ADR has no effect on the direction of Chevron Corp i.e., Chevron Corp and Ampol go up and down completely randomly.
Pair Corralation between Chevron Corp and Ampol
Considering the 90-day investment horizon Chevron Corp is expected to generate 2.42 times less return on investment than Ampol. But when comparing it to its historical volatility, Chevron Corp is 1.13 times less risky than Ampol. It trades about 0.01 of its potential returns per unit of risk. Ampol Ltd ADR is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,502 in Ampol Ltd ADR on September 3, 2024 and sell it today you would earn a total of 285.00 from holding Ampol Ltd ADR or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. Ampol Ltd ADR
Performance |
| Timeline |
| Chevron Corp |
| Ampol Ltd ADR |
Chevron Corp and Ampol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Ampol
The main advantage of trading using opposite Chevron Corp and Ampol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Ampol 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 Ampol will offset losses from the drop in Ampol's long position.The idea behind Chevron Corp and Ampol Ltd ADR 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.| Ampol vs. Ultrapar Participacoes SA | Ampol vs. Sunoco LP | Ampol vs. HF Sinclair Corp | Ampol vs. Delek Energy |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |