Correlation Between Chevron Corp and Capstone Green

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

Diversification Opportunities for Chevron Corp and Capstone Green

-0.79
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Chevron and Capstone is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy 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 Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of Chevron Corp i.e., Chevron Corp and Capstone Green go up and down completely randomly.

Pair Corralation between Chevron Corp and Capstone Green

If you would invest  20.00  in Capstone Green Energy on February 23, 2024 and sell it today you would earn a total of  0.00  from holding Capstone Green Energy or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy4.35%
ValuesDaily Returns

Chevron Corp  vs.  Capstone Green Energy

 Performance 
       Timeline  
Chevron Corp 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Capstone Green Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Capstone Green Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Capstone Green is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Chevron Corp and Capstone Green Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chevron Corp and Capstone Green

The main advantage of trading using opposite Chevron Corp and Capstone Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Capstone Green 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 Capstone Green will offset losses from the drop in Capstone Green's long position.
The idea behind Chevron Corp and Capstone Green Energy 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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