Correlation Between Chevron Corp and PGT Innovations
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and PGT Innovations 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 PGT Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and PGT Innovations, you can compare the effects of market volatilities on Chevron Corp and PGT Innovations 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 PGT Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and PGT Innovations.
Diversification Opportunities for Chevron Corp and PGT Innovations
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and PGT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and PGT Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PGT Innovations 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 PGT Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PGT Innovations has no effect on the direction of Chevron Corp i.e., Chevron Corp and PGT Innovations go up and down completely randomly.
Pair Corralation between Chevron Corp and PGT Innovations
Considering the 90-day investment horizon Chevron Corp is expected to generate 9.22 times less return on investment than PGT Innovations. But when comparing it to its historical volatility, Chevron Corp is 1.3 times less risky than PGT Innovations. It trades about 0.01 of its potential returns per unit of risk. PGT Innovations is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,545 in PGT Innovations on August 24, 2024 and sell it today you would earn a total of 250.00 from holding PGT Innovations or generate 9.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 18.8% |
| Values | Daily Returns |
Chevron Corp vs. PGT Innovations
Performance |
| Timeline |
| Chevron Corp |
| PGT Innovations |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chevron Corp and PGT Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and PGT Innovations
The main advantage of trading using opposite Chevron Corp and PGT Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, PGT Innovations 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 PGT Innovations will offset losses from the drop in PGT Innovations' long position.| Chevron Corp vs. Eshallgo Class A | Chevron Corp vs. Amtech Systems | Chevron Corp vs. Gold Fields Ltd | Chevron Corp vs. Aegean Airlines SA |
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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