Correlation Between Chevron Corp and Fennec Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Fennec Pharmaceuticals 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 Fennec Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Fennec Pharmaceuticals, you can compare the effects of market volatilities on Chevron Corp and Fennec Pharmaceuticals 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 Fennec Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Fennec Pharmaceuticals.
Diversification Opportunities for Chevron Corp and Fennec Pharmaceuticals
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chevron and Fennec is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Fennec Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fennec Pharmaceuticals 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 Fennec Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fennec Pharmaceuticals has no effect on the direction of Chevron Corp i.e., Chevron Corp and Fennec Pharmaceuticals go up and down completely randomly.
Pair Corralation between Chevron Corp and Fennec Pharmaceuticals
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.33 times more return on investment than Fennec Pharmaceuticals. However, Chevron Corp is 2.99 times less risky than Fennec Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Fennec Pharmaceuticals is currently generating about -0.02 per unit of risk. If you would invest 15,493 in Chevron Corp on August 28, 2024 and sell it today you would earn a total of 543.00 from holding Chevron Corp or generate 3.5% 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. Fennec Pharmaceuticals
Performance |
| Timeline |
| Chevron Corp |
| Fennec Pharmaceuticals |
Chevron Corp and Fennec Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Fennec Pharmaceuticals
The main advantage of trading using opposite Chevron Corp and Fennec Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Fennec Pharmaceuticals 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 Fennec Pharmaceuticals will offset losses from the drop in Fennec Pharmaceuticals' long position.The idea behind Chevron Corp and Fennec Pharmaceuticals 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.| Fennec Pharmaceuticals vs. Eliem Therapeutics | Fennec Pharmaceuticals vs. HCW Biologics | Fennec Pharmaceuticals vs. Scpharmaceuticals | Fennec Pharmaceuticals vs. Milestone Pharmaceuticals |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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