Correlation Between Chevron Corp and IShares Trust
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and IShares Trust 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 IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and iShares Trust, you can compare the effects of market volatilities on Chevron Corp and IShares Trust 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 IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and IShares Trust.
Diversification Opportunities for Chevron Corp and IShares Trust
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chevron and IShares is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 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 IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of Chevron Corp i.e., Chevron Corp and IShares Trust go up and down completely randomly.
Pair Corralation between Chevron Corp and IShares Trust
Considering the 90-day investment horizon Chevron Corp is expected to generate 2.93 times more return on investment than IShares Trust. However, Chevron Corp is 2.93 times more volatile than iShares Trust. It trades about 0.16 of its potential returns per unit of risk. iShares Trust is currently generating about 0.29 per unit of risk. If you would invest 15,242 in Chevron Corp on September 5, 2024 and sell it today you would earn a total of 590.00 from holding Chevron Corp or generate 3.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
Chevron Corp vs. iShares Trust
Performance |
| Timeline |
| Chevron Corp |
| iShares Trust |
Chevron Corp and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and IShares Trust
The main advantage of trading using opposite Chevron Corp and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, IShares Trust 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 IShares Trust will offset losses from the drop in IShares Trust's long position.| Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. TotalEnergies SE ADR | Chevron Corp vs. Equinor ASA ADR | Chevron Corp vs. Petrleo Brasileiro SA |
| IShares Trust vs. Vanguard Total Stock | IShares Trust vs. SPDR SP 500 | IShares Trust vs. Vanguard Total Bond | IShares Trust vs. Vanguard Value 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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