Correlation Between Barclays Capital and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Barclays Capital 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 Barclays Capital and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barclays Capital and Chevron Corp, you can compare the effects of market volatilities on Barclays Capital 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 Barclays Capital with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barclays Capital and Chevron Corp.
Diversification Opportunities for Barclays Capital and Chevron Corp
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Barclays and Chevron is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Barclays Capital and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Barclays Capital 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 Barclays Capital 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 Barclays Capital i.e., Barclays Capital and Chevron Corp go up and down completely randomly.
Pair Corralation between Barclays Capital and Chevron Corp
Considering the 90-day investment horizon Barclays Capital is expected to generate 1.92 times less return on investment than Chevron Corp. But when comparing it to its historical volatility, Barclays Capital is 1.13 times less risky than Chevron Corp. It trades about 0.01 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 15,435 in Chevron Corp on January 25, 2024 and sell it today you would earn a total of 850.00 from holding Chevron Corp or generate 5.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 53.64% |
Values | Daily Returns |
Barclays Capital vs. Chevron Corp
Performance |
Timeline |
Barclays Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chevron Corp |
Barclays Capital and Chevron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Barclays Capital and Chevron Corp
The main advantage of trading using opposite Barclays Capital and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barclays Capital 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.Barclays Capital vs. Vanguard Total Stock | Barclays Capital vs. SPDR SP 500 | Barclays Capital vs. iShares Core SP | Barclays Capital vs. Vanguard Total Bond |
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.
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