Correlation Between Allstate and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Allstate 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 Allstate and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Allstate and Chevron Corp, you can compare the effects of market volatilities on Allstate 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 Allstate with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allstate and Chevron Corp.
Diversification Opportunities for Allstate and Chevron Corp
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Allstate and Chevron is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding The Allstate and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Allstate 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 The Allstate 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 Allstate i.e., Allstate and Chevron Corp go up and down completely randomly.
Pair Corralation between Allstate and Chevron Corp
Considering the 90-day investment horizon Allstate is expected to generate 1.78 times less return on investment than Chevron Corp. In addition to that, Allstate is 1.3 times more volatile than Chevron Corp. It trades about 0.07 of its total potential returns per unit of risk. Chevron Corp is currently generating about 0.16 per unit of volatility. If you would invest 15,759 in Chevron Corp on February 15, 2024 and sell it today you would earn a total of 602.00 from holding Chevron Corp or generate 3.82% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
The Allstate vs. Chevron Corp
Performance |
Timeline |
Allstate |
Chevron Corp |
Allstate and Chevron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Allstate and Chevron Corp
The main advantage of trading using opposite Allstate and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allstate 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.The idea behind The Allstate and Chevron Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Suncor Energy |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Global Correlations Find global opportunities by holding instruments from different markets | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Fundamental Analysis View fundamental data based on most recent published financial statements | |
Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |