Correlation Between Chevron Corp and ProShares MSCI
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and ProShares MSCI 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 ProShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and ProShares MSCI Europe, you can compare the effects of market volatilities on Chevron Corp and ProShares MSCI 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 ProShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and ProShares MSCI.
Diversification Opportunities for Chevron Corp and ProShares MSCI
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chevron and ProShares is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ProShares MSCI Europe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares MSCI Europe 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 ProShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares MSCI Europe has no effect on the direction of Chevron Corp i.e., Chevron Corp and ProShares MSCI go up and down completely randomly.
Pair Corralation between Chevron Corp and ProShares MSCI
Considering the 90-day investment horizon Chevron Corp is expected to generate 1.44 times more return on investment than ProShares MSCI. However, Chevron Corp is 1.44 times more volatile than ProShares MSCI Europe. It trades about 0.29 of its potential returns per unit of risk. ProShares MSCI Europe is currently generating about -0.23 per unit of risk. If you would invest 14,902 in Chevron Corp on August 28, 2024 and sell it today you would earn a total of 1,134 from holding Chevron Corp or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. ProShares MSCI Europe
Performance |
| Timeline |
| Chevron Corp |
| ProShares MSCI Europe |
Chevron Corp and ProShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and ProShares MSCI
The main advantage of trading using opposite Chevron Corp and ProShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, ProShares MSCI 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 ProShares MSCI will offset losses from the drop in ProShares MSCI's long position.The idea behind Chevron Corp and ProShares MSCI Europe 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.| ProShares MSCI vs. ProShares MSCI EAFE | ProShares MSCI vs. ProShares MSCI Emerging | ProShares MSCI vs. ProShares SP MidCap | ProShares MSCI vs. ProShares Russell 2000 |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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