Correlation Between Chevron Corp and Pacer Funds
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Pacer Funds 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 Pacer Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Pacer Funds Trust, you can compare the effects of market volatilities on Chevron Corp and Pacer Funds 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 Pacer Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Pacer Funds.
Diversification Opportunities for Chevron Corp and Pacer Funds
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chevron and Pacer is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Pacer Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacer Funds Trust 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 Pacer Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacer Funds Trust has no effect on the direction of Chevron Corp i.e., Chevron Corp and Pacer Funds go up and down completely randomly.
Pair Corralation between Chevron Corp and Pacer Funds
Considering the 90-day investment horizon Chevron Corp is expected to generate 1.17 times more return on investment than Pacer Funds. However, Chevron Corp is 1.17 times more volatile than Pacer Funds Trust. It trades about 0.38 of its potential returns per unit of risk. Pacer Funds Trust is currently generating about 0.11 per unit of risk. If you would invest 14,702 in Chevron Corp on August 30, 2024 and sell it today you would earn a total of 1,509 from holding Chevron Corp or generate 10.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Chevron Corp vs. Pacer Funds Trust
Performance |
| Timeline |
| Chevron Corp |
| Pacer Funds Trust |
Chevron Corp and Pacer Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Pacer Funds
The main advantage of trading using opposite Chevron Corp and Pacer Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Pacer Funds 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 Pacer Funds will offset losses from the drop in Pacer Funds' long position.| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Suncor Energy |
| Pacer Funds vs. Invesco Actively Managed | Pacer Funds vs. iShares Trust | Pacer Funds vs. Xtrackers MSCI Emerging | Pacer Funds vs. iShares MSCI Emerging |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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