Correlation Between Alleghany and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Alleghany 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 Alleghany and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alleghany and Chevron Corp, you can compare the effects of market volatilities on Alleghany 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 Alleghany with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alleghany and Chevron Corp.
Diversification Opportunities for Alleghany and Chevron Corp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alleghany and Chevron is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Alleghany and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Alleghany 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 Alleghany 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 Alleghany i.e., Alleghany and Chevron Corp go up and down completely randomly.
Pair Corralation between Alleghany and Chevron Corp
If you would invest 15,647 in Chevron Corp on January 25, 2024 and sell it today you would earn a total of 710.00 from holding Chevron Corp or generate 4.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 4.55% |
Values | Daily Returns |
Alleghany vs. Chevron Corp
Performance |
Timeline |
Alleghany |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Chevron Corp |
Alleghany and Chevron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Alleghany and Chevron Corp
The main advantage of trading using opposite Alleghany and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alleghany 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.Alleghany vs. Jeld Wen Holding | Alleghany vs. ChampionX | Alleghany vs. Tyson Foods | Alleghany vs. Wicket Gaming AB |
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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.
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