Correlation Between Chevron Corp and Thornburg Core

Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Thornburg Core 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 Thornburg Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chevron Corp and Thornburg Core Plus, you can compare the effects of market volatilities on Chevron Corp and Thornburg Core 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 Thornburg Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Thornburg Core.

Diversification Opportunities for Chevron Corp and Thornburg Core

-0.8

Correlation Coefficient

Chevron Corp  Thornburg Core

Pay attention - limited upside

The 3 months correlation between Chevron and Thornburg is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Thornburg Core Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Core Plus 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 Thornburg Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Core Plus has no effect on the direction of Chevron Corp i.e., Chevron Corp and Thornburg Core go up and down completely randomly.

Pair Corralation between Chevron Corp and Thornburg Core

Considering the 90-day investment horizon Chevron Corp is expected to generate 3.34 times more return on investment than Thornburg Core. However, Chevron Corp is 3.34 times more volatile than Thornburg Core Plus. It trades about 0.02 of its potential returns per unit of risk. Thornburg Core Plus is currently generating about 0.08 per unit of risk. If you would invest  15,630  in Chevron Corp on September 3, 2024 and sell it today you would earn a total of  563.00  from holding Chevron Corp or generate 3.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Chevron Corp  vs.  Thornburg Core Plus

Chevron Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thornburg Core Plus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thornburg Core Plus has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Thornburg Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chevron Corp and Thornburg Core

The main advantage of trading using opposite Chevron Corp and Thornburg Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Thornburg Core 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 Thornburg Core will offset losses from the drop in Thornburg Core's long position.

The idea behind Chevron Corp and Thornburg Core Plus 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.

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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.