Correlation Between Bavarian Nordic and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic 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 Bavarian Nordic and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bavarian Nordic and Chevron Corp, you can compare the effects of market volatilities on Bavarian Nordic 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 Bavarian Nordic with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and Chevron Corp.
Diversification Opportunities for Bavarian Nordic and Chevron Corp
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bavarian and Chevron is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Bavarian Nordic 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 Bavarian Nordic 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 Bavarian Nordic i.e., Bavarian Nordic and Chevron Corp go up and down completely randomly.
Pair Corralation between Bavarian Nordic and Chevron Corp
Assuming the 90 days trading horizon Bavarian Nordic is expected to under-perform the Chevron Corp. In addition to that, Bavarian Nordic is 2.43 times more volatile than Chevron Corp. It trades about -0.14 of its total potential returns per unit of risk. Chevron Corp is currently generating about 0.21 per unit of volatility. If you would invest 15,455 in Chevron Corp on January 20, 2024 and sell it today you would earn a total of 545.00 from holding Chevron Corp or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Bavarian Nordic vs. Chevron Corp
Performance |
| Timeline |
| Bavarian Nordic |
| Chevron Corp |
Bavarian Nordic and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bavarian Nordic and Chevron Corp
The main advantage of trading using opposite Bavarian Nordic and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic 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 Bavarian Nordic 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.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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |