Correlation Between Chevron Corp and Newport Exploration
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Newport Exploration 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 Newport Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Newport Exploration, you can compare the effects of market volatilities on Chevron Corp and Newport Exploration 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 Newport Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Newport Exploration.
Diversification Opportunities for Chevron Corp and Newport Exploration
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chevron and Newport is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Newport Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newport Exploration 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 Newport Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newport Exploration has no effect on the direction of Chevron Corp i.e., Chevron Corp and Newport Exploration go up and down completely randomly.
Pair Corralation between Chevron Corp and Newport Exploration
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.22 times more return on investment than Newport Exploration. However, Chevron Corp is 4.47 times less risky than Newport Exploration. It trades about 0.29 of its potential returns per unit of risk. Newport Exploration is currently generating about -0.09 per unit of risk. If you would invest 15,242 in Chevron Corp on September 4, 2024 and sell it today you would earn a total of 979.00 from holding Chevron Corp or generate 6.42% 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. Newport Exploration
Performance |
| Timeline |
| Chevron Corp |
| Newport Exploration |
Chevron Corp and Newport Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Newport Exploration
The main advantage of trading using opposite Chevron Corp and Newport Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Newport Exploration 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 Newport Exploration will offset losses from the drop in Newport Exploration's long position.| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. TotalEnergies SE ADR | Chevron Corp vs. Equinor ASA ADR |
| Newport Exploration vs. Traction Uranium Corp | Newport Exploration vs. New Age Metals | Newport Exploration vs. York Harbour Metals | Newport Exploration vs. Silver Elephant Mining |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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