Correlation Between Chevron Corp and Fidelity MSCI
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Fidelity 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 Fidelity 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 Fidelity MSCI Consumer, you can compare the effects of market volatilities on Chevron Corp and Fidelity 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 Fidelity MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Fidelity MSCI.
Diversification Opportunities for Chevron Corp and Fidelity MSCI
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chevron and Fidelity is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Fidelity MSCI Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity MSCI Consumer 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 Fidelity MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity MSCI Consumer has no effect on the direction of Chevron Corp i.e., Chevron Corp and Fidelity MSCI go up and down completely randomly.
Pair Corralation between Chevron Corp and Fidelity MSCI
Considering the 90-day investment horizon Chevron Corp is expected to generate 1.37 times less return on investment than Fidelity MSCI. In addition to that, Chevron Corp is 1.97 times more volatile than Fidelity MSCI Consumer. It trades about 0.03 of its total potential returns per unit of risk. Fidelity MSCI Consumer is currently generating about 0.08 per unit of volatility. If you would invest 4,309 in Fidelity MSCI Consumer on August 27, 2024 and sell it today you would earn a total of 839.00 from holding Fidelity MSCI Consumer or generate 19.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. Fidelity MSCI Consumer
Performance |
| Timeline |
| Chevron Corp |
| Fidelity MSCI Consumer |
Chevron Corp and Fidelity MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Fidelity MSCI
The main advantage of trading using opposite Chevron Corp and Fidelity MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Fidelity 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 Fidelity MSCI will offset losses from the drop in Fidelity MSCI's long position.The idea behind Chevron Corp and Fidelity MSCI Consumer 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.| Fidelity MSCI vs. Vanguard Consumer Discretionary | Fidelity MSCI vs. Vanguard Utilities Index | Fidelity MSCI vs. Vanguard Industrials Index | Fidelity MSCI vs. Vanguard Materials Index |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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