Correlation Between Chevron Corp and Lithia
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By analyzing existing cross correlation between Chevron Corp and Lithia Motors 4625, you can compare the effects of market volatilities on Chevron Corp and Lithia 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 Lithia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Lithia.
Diversification Opportunities for Chevron Corp and Lithia
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chevron and Lithia is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Lithia Motors 4625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lithia Motors 4625 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 Lithia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lithia Motors 4625 has no effect on the direction of Chevron Corp i.e., Chevron Corp and Lithia go up and down completely randomly.
Pair Corralation between Chevron Corp and Lithia
Considering the 90-day investment horizon Chevron Corp is expected to generate 291.7 times less return on investment than Lithia. But when comparing it to its historical volatility, Chevron Corp is 53.57 times less risky than Lithia. It trades about 0.01 of its potential returns per unit of risk. Lithia Motors 4625 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 9,253 in Lithia Motors 4625 on September 2, 2024 and sell it today you would lose (491.00) from holding Lithia Motors 4625 or give up 5.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 79.03% |
| Values | Daily Returns |
Chevron Corp vs. Lithia Motors 4625
Performance |
| Timeline |
| Chevron Corp |
| Lithia Motors 4625 |
Chevron Corp and Lithia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Lithia
The main advantage of trading using opposite Chevron Corp and Lithia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Lithia 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 Lithia will offset losses from the drop in Lithia'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 |
| Lithia vs. Stepan Company | Lithia vs. CECO Environmental Corp | Lithia vs. Sanyo Special Steel | Lithia vs. Procter Gamble |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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