Correlation Between Chevron Corp and Xinjiang Goldwind
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Xinjiang Goldwind 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 Xinjiang Goldwind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Xinjiang Goldwind Science, you can compare the effects of market volatilities on Chevron Corp and Xinjiang Goldwind 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 Xinjiang Goldwind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Xinjiang Goldwind.
Diversification Opportunities for Chevron Corp and Xinjiang Goldwind
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and Xinjiang is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Xinjiang Goldwind Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Goldwind Science 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 Xinjiang Goldwind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Goldwind Science has no effect on the direction of Chevron Corp i.e., Chevron Corp and Xinjiang Goldwind go up and down completely randomly.
Pair Corralation between Chevron Corp and Xinjiang Goldwind
Considering the 90-day investment horizon Chevron Corp is expected to generate 8.01 times less return on investment than Xinjiang Goldwind. But when comparing it to its historical volatility, Chevron Corp is 4.57 times less risky than Xinjiang Goldwind. It trades about 0.01 of its potential returns per unit of risk. Xinjiang Goldwind Science is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 89.00 in Xinjiang Goldwind Science on September 1, 2024 and sell it today you would lose (9.00) from holding Xinjiang Goldwind Science or give up 10.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 68.79% |
| Values | Daily Returns |
Chevron Corp vs. Xinjiang Goldwind Science
Performance |
| Timeline |
| Chevron Corp |
| Xinjiang Goldwind Science |
Chevron Corp and Xinjiang Goldwind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Xinjiang Goldwind
The main advantage of trading using opposite Chevron Corp and Xinjiang Goldwind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Xinjiang Goldwind 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 Xinjiang Goldwind will offset losses from the drop in Xinjiang Goldwind's long position.| Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Equinor ASA ADR | Chevron Corp vs. Petrleo Brasileiro SA |
| Xinjiang Goldwind vs. Shanghai Electric Group | Xinjiang Goldwind vs. American Superconductor | Xinjiang Goldwind vs. Cummins |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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