Correlation Between Chevron Corp and American Funds
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and American Funds 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 Funds 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 Funds 2050, you can compare the effects of market volatilities on Chevron Corp and American Funds 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 Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and American Funds.
Diversification Opportunities for Chevron Corp and American Funds
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and American is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and American Funds 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2050 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 Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2050 has no effect on the direction of Chevron Corp i.e., Chevron Corp and American Funds go up and down completely randomly.
Pair Corralation between Chevron Corp and American Funds
Considering the 90-day investment horizon Chevron Corp is expected to generate 1.86 times more return on investment than American Funds. However, Chevron Corp is 1.86 times more volatile than American Funds 2050. It trades about 0.35 of its potential returns per unit of risk. American Funds 2050 is currently generating about 0.1 per unit of risk. If you would invest 14,902 in Chevron Corp on August 29, 2024 and sell it today you would earn a total of 1,456 from holding Chevron Corp or generate 9.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. American Funds 2050
Performance |
| Timeline |
| Chevron Corp |
| American Funds 2050 |
Chevron Corp and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and American Funds
The main advantage of trading using opposite Chevron Corp and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, American Funds 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 Funds will offset losses from the drop in American Funds' long position.| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Suncor Energy |
| American Funds vs. Kinetics Global Fund | American Funds vs. T Rowe Price | American Funds vs. Artisan Global Unconstrained | American Funds vs. Dreyfusstandish Global Fixed |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |