Correlation Between Anadarko Petroleum and Chevron Corp

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Can any of the company-specific risk be diversified away by investing in both Anadarko Petroleum 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 Anadarko Petroleum and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Anadarko Petroleum and Chevron Corp, you can compare the effects of market volatilities on Anadarko Petroleum 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 Anadarko Petroleum with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Anadarko Petroleum and Chevron Corp.

Diversification Opportunities for Anadarko Petroleum and Chevron Corp

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Anadarko and Chevron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Anadarko Petroleum and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Anadarko Petroleum 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 Anadarko Petroleum 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 Anadarko Petroleum i.e., Anadarko Petroleum and Chevron Corp go up and down completely randomly.

Pair Corralation between Anadarko Petroleum and Chevron Corp

If you would invest  13,314  in Chevron Corp on December 19, 2023 and sell it today you would earn a total of  2,227  from holding Chevron Corp or generate 16.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.27%
ValuesDaily Returns

Anadarko Petroleum  vs.  Chevron Corp

 Performance 
       Timeline  
Anadarko Petroleum 

Risk-Adjusted Performance

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Over the last 90 days Anadarko Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Anadarko Petroleum is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Chevron Corp 

Risk-Adjusted Performance

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Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Anadarko Petroleum and Chevron Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Anadarko Petroleum and Chevron Corp

The main advantage of trading using opposite Anadarko Petroleum and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Anadarko Petroleum 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 Anadarko Petroleum 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.
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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