Correlation Between Chevron Corp and Amazon

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Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Amazon 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 Chevron Corp and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Amazon Inc, you can compare the effects of market volatilities on Chevron Corp and Amazon 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 Chevron Corp with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Amazon.

Diversification Opportunities for Chevron Corp and Amazon

0.16
  Correlation Coefficient

Average diversification

The 3 months correlation between Chevron and Amazon is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and Chevron Corp 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 Chevron Corp are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of Chevron Corp i.e., Chevron Corp and Amazon go up and down completely randomly.

Pair Corralation between Chevron Corp and Amazon

Considering the 90-day investment horizon Chevron Corp is expected to generate 10.0 times less return on investment than Amazon. But when comparing it to its historical volatility, Chevron Corp is 1.68 times less risky than Amazon. It trades about 0.02 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  8,909  in Amazon Inc on November 9, 2022 and sell it today you would earn a total of  1,309  from holding Amazon Inc or generate 14.69% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Chevron Corp  vs.  Amazon Inc

 Performance (%) 
       Timeline  
Chevron Corp 
Chevron Performance
0 of 100
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 recent stock price disturbance, may contribute to short-term losses for the investors.

Chevron Price Channel

Amazon Inc 
Amazon Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Amazon displayed solid returns over the last few months and may actually be approaching a breakup point.

Amazon Price Channel

Chevron Corp and Amazon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chevron Corp and Amazon

The main advantage of trading using opposite Chevron Corp and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.
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The idea behind Chevron Corp and Amazon Inc 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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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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