Correlation Between Chevron Corp and Jpmorgan Hedged

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

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

Diversification Opportunities for Chevron Corp and Jpmorgan Hedged

0.03

Correlation Coefficient

Chevron Corp  Jpmorgan Hedged

Significant diversification

The 3 months correlation between Chevron and Jpmorgan is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Jpmorgan Hedged Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Hedged Equity 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 Jpmorgan Hedged. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Hedged Equity has no effect on the direction of Chevron Corp i.e., Chevron Corp and Jpmorgan Hedged go up and down completely randomly.

Pair Corralation between Chevron Corp and Jpmorgan Hedged

Considering the 90-day investment horizon Chevron Corp is expected to generate 2.08 times more return on investment than Jpmorgan Hedged. However, Chevron Corp is 2.08 times more volatile than Jpmorgan Hedged Equity. It trades about 0.19 of its potential returns per unit of risk. Jpmorgan Hedged Equity is currently generating about 0.23 per unit of risk. If you would invest  15,759  in Chevron Corp on February 14, 2024 and sell it today you would earn a total of  694.00  from holding Chevron Corp or generate 4.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Chevron Corp  vs.  Jpmorgan Hedged Equity

Chevron Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Jpmorgan Hedged Equity

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Hedged Equity are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Jpmorgan Hedged 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 Jpmorgan Hedged

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

The idea behind Chevron Corp and Jpmorgan Hedged Equity 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 Global Correlations module to find global opportunities by holding instruments from different markets.