Correlation Between General Dynamics and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both General Dynamics 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 General Dynamics and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Dynamics and Chevron Corp, you can compare the effects of market volatilities on General Dynamics 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 General Dynamics with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Dynamics and Chevron Corp.
Diversification Opportunities for General Dynamics and Chevron Corp
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between General and Chevron is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding General Dynamics and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and General Dynamics 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 General Dynamics 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 General Dynamics i.e., General Dynamics and Chevron Corp go up and down completely randomly.
Pair Corralation between General Dynamics and Chevron Corp
Allowing for the 90-day total investment horizon General Dynamics is expected to generate 0.88 times more return on investment than Chevron Corp. However, General Dynamics is 1.13 times less risky than Chevron Corp. It trades about 0.24 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.17 per unit of risk. If you would invest 24,854 in General Dynamics on January 20, 2024 and sell it today you would earn a total of 3,673 from holding General Dynamics or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Dynamics vs. Chevron Corp
Performance |
| Timeline |
| General Dynamics |
| Chevron Corp |
General Dynamics and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Dynamics and Chevron Corp
The main advantage of trading using opposite General Dynamics and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Dynamics 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.| General Dynamics vs. Novocure | General Dynamics vs. HubSpot | General Dynamics vs. DigitalOcean Holdings | General Dynamics vs. Appian Corp |
| Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Imperial Oil | Chevron Corp vs. Petrleo Brasileiro SA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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