Correlation Between National Fuel and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both National Fuel and Chevron Corp 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 National Fuel and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Fuel Gas and Chevron Corp, you can compare the effects of market volatilities on National Fuel and Chevron Corp 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 National Fuel with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Fuel and Chevron Corp.
Diversification Opportunities for National Fuel and Chevron Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between National and Chevron is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding National Fuel Gas and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and National Fuel 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 National Fuel Gas are associated (or correlated) with Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of National Fuel i.e., National Fuel and Chevron Corp go up and down completely randomly.
Pair Corralation between National Fuel and Chevron Corp
Considering the 90-day investment horizon National Fuel is expected to generate 1.22 times less return on investment than Chevron Corp. In addition to that, National Fuel is 1.86 times more volatile than Chevron Corp. It trades about 0.13 of its total potential returns per unit of risk. Chevron Corp is currently generating about 0.29 per unit of volatility. If you would invest 15,242 in Chevron Corp on September 4, 2024 and sell it today you would earn a total of 979.00 from holding Chevron Corp or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Fuel Gas vs. Chevron Corp
Performance |
| Timeline |
| National Fuel Gas |
| Chevron Corp |
National Fuel and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Fuel and Chevron Corp
The main advantage of trading using opposite National Fuel and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Fuel position performs unexpectedly, Chevron Corp 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 Corp will offset losses from the drop in Chevron Corp's long position.| National Fuel vs. YPF Sociedad Anonima | National Fuel vs. Eni SpA ADR | National Fuel vs. Ecopetrol SA ADR | National Fuel vs. TotalEnergies SE ADR |
| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. TotalEnergies SE ADR | Chevron Corp vs. Equinor ASA ADR |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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