Correlation Between Chevron Corp and ProShares
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and ProShares 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 ProShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and ProShares SP MidCap, you can compare the effects of market volatilities on Chevron Corp and ProShares 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 ProShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and ProShares.
Diversification Opportunities for Chevron Corp and ProShares
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chevron and ProShares is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ProShares SP MidCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares SP MidCap 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 ProShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares SP MidCap has no effect on the direction of Chevron Corp i.e., Chevron Corp and ProShares go up and down completely randomly.
Pair Corralation between Chevron Corp and ProShares
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.96 times more return on investment than ProShares. However, Chevron Corp is 1.04 times less risky than ProShares. It trades about 0.33 of its potential returns per unit of risk. ProShares SP MidCap is currently generating about 0.21 per unit of risk. If you would invest 14,896 in Chevron Corp on August 24, 2024 and sell it today you would earn a total of 1,267 from holding Chevron Corp or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. ProShares SP MidCap
Performance |
| Timeline |
| Chevron Corp |
| ProShares SP MidCap |
Chevron Corp and ProShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and ProShares
The main advantage of trading using opposite Chevron Corp and ProShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, ProShares 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 ProShares will offset losses from the drop in ProShares' long position.| Chevron Corp vs. Exxon Mobil Corp | Chevron Corp vs. Small Cap Core | Chevron Corp vs. Freedom Holding Corp | Chevron Corp vs. Gfl Environmental Holdings |
| ProShares vs. ProShares Russell 2000 | ProShares vs. ProShares MSCI EAFE | ProShares vs. ProShares MSCI Emerging | ProShares vs. ProShares MSCI Europe |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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