Correlation Between Digilife Technologies and Chevron
Can any of the company-specific risk be diversified away by investing in both Digilife Technologies 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 Digilife Technologies and Chevron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digilife Technologies Limited and Chevron, you can compare the effects of market volatilities on Digilife Technologies 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 Digilife Technologies with a short position of Chevron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and Chevron.
Diversification Opportunities for Digilife Technologies and Chevron
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digilife and Chevron is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and Chevron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron and Digilife Technologies 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 Digilife Technologies Limited 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 Digilife Technologies i.e., Digilife Technologies and Chevron go up and down completely randomly.
Pair Corralation between Digilife Technologies and Chevron
Assuming the 90 days trading horizon Digilife Technologies Limited is expected to under-perform the Chevron. In addition to that, Digilife Technologies is 2.78 times more volatile than Chevron. It trades about -0.02 of its total potential returns per unit of risk. Chevron is currently generating about 0.21 per unit of volatility. If you would invest 12,466 in Chevron on September 12, 2024 and sell it today you would earn a total of 2,434 from holding Chevron or generate 19.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Digilife Technologies Limited vs. Chevron
Performance |
| Timeline |
| Digilife Technologies |
| Chevron |
Digilife Technologies and Chevron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digilife Technologies and Chevron
The main advantage of trading using opposite Digilife Technologies and Chevron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digilife Technologies 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.| Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. SIVERS SEMICONDUCTORS AB | Digilife Technologies vs. Norsk Hydro ASA | Digilife Technologies vs. Reliance Steel Aluminum |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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