Correlation Between MAHLE Metal and Chevron
Can any of the company-specific risk be diversified away by investing in both MAHLE Metal and Chevron 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 MAHLE Metal and Chevron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAHLE Metal Leve and Chevron, you can compare the effects of market volatilities on MAHLE Metal and Chevron 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 MAHLE Metal with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAHLE Metal and Chevron.
Diversification Opportunities for MAHLE Metal and Chevron
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MAHLE and Chevron is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding MAHLE Metal Leve and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and MAHLE Metal 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 MAHLE Metal Leve are associated (or correlated) with Chevron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron has no effect on the direction of MAHLE Metal i.e., MAHLE Metal and Chevron go up and down completely randomly.
Pair Corralation between MAHLE Metal and Chevron
Assuming the 90 days trading horizon MAHLE Metal Leve is expected to under-perform the Chevron. In addition to that, MAHLE Metal is 1.14 times more volatile than Chevron. It trades about -0.02 of its total potential returns per unit of risk. Chevron is currently generating about 0.06 per unit of volatility. If you would invest 7,320 in Chevron on November 8, 2024 and sell it today you would earn a total of 1,603 from holding Chevron or generate 21.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAHLE Metal Leve vs. Chevron
Performance |
| Timeline |
| MAHLE Metal Leve |
| Chevron |
MAHLE Metal and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAHLE Metal and Chevron
The main advantage of trading using opposite MAHLE Metal and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAHLE Metal position performs unexpectedly, Chevron 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 Chevron will offset losses from the drop in Chevron's long position.The idea behind MAHLE Metal Leve and Chevron 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.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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