Correlation Between Chevron Corp and Knowles Cor
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Knowles Cor 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 Knowles Cor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Knowles Cor, you can compare the effects of market volatilities on Chevron Corp and Knowles Cor 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 Knowles Cor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Knowles Cor.
Diversification Opportunities for Chevron Corp and Knowles Cor
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Chevron and Knowles is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor 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 Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of Chevron Corp i.e., Chevron Corp and Knowles Cor go up and down completely randomly.
Pair Corralation between Chevron Corp and Knowles Cor
Considering the 90-day investment horizon Chevron Corp is expected to generate 0.66 times more return on investment than Knowles Cor. However, Chevron Corp is 1.53 times less risky than Knowles Cor. It trades about 0.11 of its potential returns per unit of risk. Knowles Cor is currently generating about 0.05 per unit of risk. If you would invest 13,940 in Chevron Corp on February 6, 2024 and sell it today you would earn a total of 2,085 from holding Chevron Corp or generate 14.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. Knowles Cor
Performance |
| Timeline |
| Chevron Corp |
| Knowles Cor |
Chevron Corp and Knowles Cor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and Knowles Cor
The main advantage of trading using opposite Chevron Corp and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Knowles Cor 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 Knowles Cor will offset losses from the drop in Knowles Cor's long position.| Chevron Corp vs. Aquagold International | Chevron Corp vs. Morningstar Unconstrained Allocation | Chevron Corp vs. Thrivent High Yield | Chevron Corp vs. Via Renewables |
| Knowles Cor vs. CACI International | Knowles Cor vs. Jack Henry Associates | Knowles Cor vs. ExlService Holdings | Knowles Cor vs. Infosys Ltd 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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