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 Dow30, 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
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Chevron and ProShares is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ProShares UltraPro Dow30 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraPro Dow30 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 Dow30 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 2.96 times less return on investment than ProShares UltraPro. But when comparing it to its historical volatility, Chevron Corp is 2.69 times less risky than ProShares UltraPro. It trades about 0.31 of its potential returns per unit of risk. ProShares UltraPro Dow30 is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 9,306 in ProShares UltraPro Dow30 on September 2, 2024 and sell it today you would earn a total of 1,970 from holding ProShares UltraPro Dow30 or generate 21.17% 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 UltraPro Dow30
Performance |
| Timeline |
| Chevron Corp |
| ProShares UltraPro Dow30 |
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.| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Suncor Energy |
| ProShares UltraPro vs. ProShares UltraPro Short | ProShares UltraPro vs. ProShares UltraPro SP500 | ProShares UltraPro vs. ProShares UltraPro Russell2000 | ProShares UltraPro vs. Direxion Daily SP500 |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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