Correlation Between Chevron Corp and Enbridge
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Enbridge 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 Enbridge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Enbridge, you can compare the effects of market volatilities on Chevron Corp and Enbridge 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 Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Enbridge.
Diversification Opportunities for Chevron Corp and Enbridge
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and Enbridge is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 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 Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Chevron Corp i.e., Chevron Corp and Enbridge go up and down completely randomly.
Pair Corralation between Chevron Corp and Enbridge
Considering the 90-day investment horizon Chevron Corp is expected to generate 2.4 times more return on investment than Enbridge. However, Chevron Corp is 2.4 times more volatile than Enbridge. It trades about 0.28 of its potential returns per unit of risk. Enbridge is currently generating about 0.34 per unit of risk. If you would invest 15,242 in Chevron Corp on September 5, 2024 and sell it today you would earn a total of 950.00 from holding Chevron Corp or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Chevron Corp vs. Enbridge
Performance |
| Timeline |
| Chevron Corp |
| Enbridge |
Chevron Corp and Enbridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Enbridge
The main advantage of trading using opposite Chevron Corp and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.| Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. TotalEnergies SE ADR | Chevron Corp vs. Equinor ASA ADR | Chevron Corp vs. Petrleo Brasileiro SA |
| Enbridge vs. GasLog Partners LP | Enbridge vs. GasLog Partners LP | Enbridge vs. NGL Energy Partners | Enbridge vs. Seapeak LLC |
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 CEOs Directory module to screen CEOs from public companies around the world.
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