Correlation Between Capital Bancorp and Chevron Corp

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

By analyzing existing cross correlation between Capital Bancorp and Chevron Corp, you can compare the effects of market volatilities on Capital Bancorp 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 Capital Bancorp with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Bancorp and Chevron Corp.

Diversification Opportunities for Capital Bancorp and Chevron Corp

-0.04

Correlation Coefficient

Capital Bancorp  Chevron Corp

Good diversification

The 3 months correlation between Capital and Chevron is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Capital Bancorp and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Capital Bancorp 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 Capital Bancorp 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 Capital Bancorp i.e., Capital Bancorp and Chevron Corp go up and down completely randomly.

Pair Corralation between Capital Bancorp and Chevron Corp

Given the investment horizon of 90 days Capital Bancorp is expected to under-perform the Chevron Corp. In addition to that, Capital Bancorp is 1.22 times more volatile than Chevron Corp. It trades about -0.02 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  15,400  in Chevron Corp on March 15, 2024 and sell it today you would earn a total of  22.00  from holding Chevron Corp or generate 0.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Capital Bancorp  vs.  Chevron Corp

Capital Bancorp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Capital Bancorp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Chevron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chevron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Capital Bancorp and Chevron Corp

The main advantage of trading using opposite Capital Bancorp and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Bancorp 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 Capital Bancorp 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.

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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.