Correlation Between SKAGEN Kon and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both SKAGEN Kon 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 SKAGEN Kon and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SKAGEN Kon Tiki A and Chevron Corp, you can compare the effects of market volatilities on SKAGEN Kon 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 SKAGEN Kon with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of SKAGEN Kon and Chevron Corp.
Diversification Opportunities for SKAGEN Kon and Chevron Corp
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SKAGEN and Chevron is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding SKAGEN Kon Tiki A and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and SKAGEN Kon 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 SKAGEN Kon Tiki A 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 SKAGEN Kon i.e., SKAGEN Kon and Chevron Corp go up and down completely randomly.
Pair Corralation between SKAGEN Kon and Chevron Corp
Assuming the 90 days trading horizon SKAGEN Kon Tiki A is expected to under-perform the Chevron Corp. In addition to that, SKAGEN Kon is 1.12 times more volatile than Chevron Corp. It trades about -0.01 of its total potential returns per unit of risk. Chevron Corp is currently generating about 0.01 per unit of volatility. If you would invest 15,558 in Chevron Corp on January 24, 2024 and sell it today you would earn a total of 634.00 from holding Chevron Corp or generate 4.08% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.8% |
Values | Daily Returns |
SKAGEN Kon Tiki A vs. Chevron Corp
Performance |
Timeline |
SKAGEN Kon Tiki |
Chevron Corp |
SKAGEN Kon and Chevron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SKAGEN Kon and Chevron Corp
The main advantage of trading using opposite SKAGEN Kon and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SKAGEN Kon 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.SKAGEN Kon vs. Novo Nordisk AS | SKAGEN Kon vs. Nordea Bank Abp | SKAGEN Kon vs. DSV Panalpina AS | SKAGEN Kon vs. AP Mller |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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