Correlation Between LG Display and Chevron
Can any of the company-specific risk be diversified away by investing in both LG Display 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 LG Display and Chevron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LG Display Co and Chevron, you can compare the effects of market volatilities on LG Display 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 LG Display with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of LG Display and Chevron.
Diversification Opportunities for LG Display and Chevron
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between LGA and Chevron is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding LG Display Co and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and LG Display 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 LG Display Co 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 LG Display i.e., LG Display and Chevron go up and down completely randomly.
Pair Corralation between LG Display and Chevron
Assuming the 90 days horizon LG Display Co is expected to under-perform the Chevron. In addition to that, LG Display is 2.03 times more volatile than Chevron. It trades about -0.05 of its total potential returns per unit of risk. Chevron is currently generating about 0.05 per unit of volatility. If you would invest 12,635 in Chevron on September 14, 2024 and sell it today you would earn a total of 2,159 from holding Chevron or generate 17.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LG Display Co vs. Chevron
Performance |
| Timeline |
| LG Display |
| Chevron |
LG Display and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LG Display and Chevron
The main advantage of trading using opposite LG Display and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LG Display 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.| LG Display vs. Samsung Electronics Co | LG Display vs. Sony Group | LG Display vs. Superior Plus Corp | LG Display vs. SIVERS SEMICONDUCTORS AB |
| Chevron vs. TRAVEL LEISURE DL 01 | Chevron vs. PLAY2CHILL SA ZY | Chevron vs. LG Display Co | Chevron vs. COLUMBIA SPORTSWEAR |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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