Correlation Between Phillips and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Phillips 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 Phillips and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phillips 66 and Chevron Corp, you can compare the effects of market volatilities on Phillips 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 Phillips with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phillips and Chevron Corp.
Diversification Opportunities for Phillips and Chevron Corp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phillips and Chevron is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Phillips 66 and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Phillips 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 Phillips 66 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 Phillips i.e., Phillips and Chevron Corp go up and down completely randomly.
Pair Corralation between Phillips and Chevron Corp
Considering the 90-day investment horizon Phillips 66 is expected to generate 1.31 times more return on investment than Chevron Corp. However, Phillips is 1.31 times more volatile 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 12,816 in Phillips 66 on January 19, 2024 and sell it today you would earn a total of 2,909 from holding Phillips 66 or generate 22.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.41% |
| Values | Daily Returns |
Phillips 66 vs. Chevron Corp
Performance |
| Timeline |
| Phillips 66 |
| Chevron Corp |
Phillips and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phillips and Chevron Corp
The main advantage of trading using opposite Phillips and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phillips 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.| Phillips vs. Marathon Petroleum Corp | Phillips vs. HF Sinclair Corp | Phillips vs. PBF Energy | Phillips vs. Sunoco LP |
| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Suncor Energy |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |