Correlation Between Hess and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Hess 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 Hess and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hess Corporation and Chevron Corp, you can compare the effects of market volatilities on Hess 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 Hess with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess and Chevron Corp.
Diversification Opportunities for Hess and Chevron Corp
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hess and Chevron is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Hess Corp. and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Hess 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 Hess Corporation 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 Hess i.e., Hess and Chevron Corp go up and down completely randomly.
Pair Corralation between Hess and Chevron Corp
Considering the 90-day investment horizon Hess is expected to generate 1.02 times less return on investment than Chevron Corp. In addition to that, Hess is 1.34 times more volatile than Chevron Corp. It trades about 0.15 of its total potential returns per unit of risk. Chevron Corp is currently generating about 0.2 per unit of volatility. If you would invest 15,486 in Chevron Corp on January 21, 2024 and sell it today you would earn a total of 514.00 from holding Chevron Corp or generate 3.32% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Hess Corp. vs. Chevron Corp
Performance |
Timeline |
Hess |
Chevron Corp |
Hess and Chevron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hess and Chevron Corp
The main advantage of trading using opposite Hess and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess 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.Hess vs. Diamondback Energy | Hess vs. ConocoPhillips | Hess vs. Pioneer Natural Resources | Hess vs. APA Corporation |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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