Correlation Between Chevron Corp and Adams Resources
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Adams Resources 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 Adams Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Adams Resources Energy, you can compare the effects of market volatilities on Chevron Corp and Adams Resources 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 Adams Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Adams Resources.
Diversification Opportunities for Chevron Corp and Adams Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and Adams is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Adams Resources Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Resources Energy 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 Adams Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Resources Energy has no effect on the direction of Chevron Corp i.e., Chevron Corp and Adams Resources go up and down completely randomly.
Pair Corralation between Chevron Corp and Adams Resources
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.58 times more return on investment than Adams Resources. However, Chevron Corp is 1.72 times less risky than Adams Resources. It trades about 0.19 of its potential returns per unit of risk. Adams Resources Energy is currently generating about -0.09 per unit of risk. If you would invest 15,896 in Chevron Corp on February 12, 2024 and sell it today you would earn a total of 686.00 from holding Chevron Corp or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. Adams Resources Energy
Performance |
| Timeline |
| Chevron Corp |
| Adams Resources Energy |
Chevron Corp and Adams Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Adams Resources
The main advantage of trading using opposite Chevron Corp and Adams Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Adams Resources 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 Adams Resources will offset losses from the drop in Adams Resources' long position.| Chevron Corp vs. MIRA Pharmaceuticals Common | Chevron Corp vs. Planet Fitness | Chevron Corp vs. Griffon | Chevron Corp vs. Terawulf |
| Adams Resources vs. Delek Energy | Adams Resources vs. Sunoco LP | Adams Resources vs. CVR Energy | Adams Resources vs. Phillips 66 |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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