Correlation Between Chevron Corp and BIOGEN

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Can any of the company-specific risk be diversified away by investing in both Chevron Corp and BIOGEN 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 BIOGEN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and BIOGEN INC 52, you can compare the effects of market volatilities on Chevron Corp and BIOGEN 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 BIOGEN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and BIOGEN.

Diversification Opportunities for Chevron Corp and BIOGEN

-0.36
  Correlation Coefficient

Very good diversification

The 3 months correlation between Chevron and BIOGEN is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and BIOGEN INC 52 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIOGEN INC 52 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 BIOGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIOGEN INC 52 has no effect on the direction of Chevron Corp i.e., Chevron Corp and BIOGEN go up and down completely randomly.

Pair Corralation between Chevron Corp and BIOGEN

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.36 times more return on investment than BIOGEN. However, Chevron Corp is 2.79 times less risky than BIOGEN. It trades about 0.35 of its potential returns per unit of risk. BIOGEN INC 52 is currently generating about -0.16 per unit of risk. If you would invest  14,893  in Chevron Corp on August 25, 2024 and sell it today you would earn a total of  1,343  from holding Chevron Corp or generate 9.02% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy86.36%
ValuesDaily Returns

Chevron Corp  vs.  BIOGEN INC 52

 Performance 
       Timeline  
Chevron Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in December 2024.
BIOGEN INC 52 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BIOGEN INC 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for BIOGEN INC 52 investors.

Chevron Corp and BIOGEN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chevron Corp and BIOGEN

The main advantage of trading using opposite Chevron Corp and BIOGEN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, BIOGEN 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 BIOGEN will offset losses from the drop in BIOGEN's long position.
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The idea behind Chevron Corp and BIOGEN INC 52 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.
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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