Correlation Between Chevron Corp and ProShares UltraPro
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and ProShares UltraPro 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 UltraPro 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 UltraPro Short, you can compare the effects of market volatilities on Chevron Corp and ProShares UltraPro 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 UltraPro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and ProShares UltraPro.
Diversification Opportunities for Chevron Corp and ProShares UltraPro
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chevron and ProShares is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ProShares UltraPro Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Short 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 UltraPro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraPro Short has no effect on the direction of Chevron Corp i.e., Chevron Corp and ProShares UltraPro go up and down completely randomly.
Pair Corralation between Chevron Corp and ProShares UltraPro
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.3 times more return on investment than ProShares UltraPro. However, Chevron Corp is 3.34 times less risky than ProShares UltraPro. It trades about 0.06 of its potential returns per unit of risk. ProShares UltraPro Short is currently generating about -0.08 per unit of risk. If you would invest 13,767 in Chevron Corp on August 26, 2024 and sell it today you would earn a total of 2,469 from holding Chevron Corp or generate 17.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. ProShares UltraPro Short
Performance |
| Timeline |
| Chevron Corp |
| ProShares UltraPro Short |
Chevron Corp and ProShares UltraPro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and ProShares UltraPro
The main advantage of trading using opposite Chevron Corp and ProShares UltraPro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, ProShares UltraPro 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 UltraPro will offset losses from the drop in ProShares UltraPro's long position.The idea behind Chevron Corp and ProShares UltraPro Short pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| ProShares UltraPro vs. Dimensional ETF Trust | ProShares UltraPro vs. Vanguard Small Cap Index | ProShares UltraPro vs. First Trust Multi Manager | ProShares UltraPro vs. Vanguard SP Small Cap |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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