Correlation Between Chevron Corp and Greater Cannabis
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Greater Cannabis 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 Greater Cannabis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Greater Cannabis, you can compare the effects of market volatilities on Chevron Corp and Greater Cannabis 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 Greater Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Greater Cannabis.
Diversification Opportunities for Chevron Corp and Greater Cannabis
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chevron and Greater is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Greater Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greater Cannabis 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 Greater Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greater Cannabis has no effect on the direction of Chevron Corp i.e., Chevron Corp and Greater Cannabis go up and down completely randomly.
Pair Corralation between Chevron Corp and Greater Cannabis
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.09 times more return on investment than Greater Cannabis. However, Chevron Corp is 11.66 times less risky than Greater Cannabis. It trades about 0.33 of its potential returns per unit of risk. Greater Cannabis is currently generating about -0.01 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 1,351 from holding Chevron Corp or generate 9.07% 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. Greater Cannabis
Performance |
| Timeline |
| Chevron Corp |
| Greater Cannabis |
Chevron Corp and Greater Cannabis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Greater Cannabis
The main advantage of trading using opposite Chevron Corp and Greater Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Greater Cannabis 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 Greater Cannabis will offset losses from the drop in Greater Cannabis' long position.The idea behind Chevron Corp and Greater Cannabis 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.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Transaction History View history of all your transactions and understand their impact on performance |