Correlation Between Guggenheim Macro and Chevron Corp

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

Diversification Opportunities for Guggenheim Macro and Chevron Corp

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between Guggenheim and Chevron is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Guggenheim Macro Opportunities and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Guggenheim Macro 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 Guggenheim Macro Opportunities 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 Guggenheim Macro i.e., Guggenheim Macro and Chevron Corp go up and down completely randomly.

Pair Corralation between Guggenheim Macro and Chevron Corp

Assuming the 90 days horizon Guggenheim Macro is expected to generate 20.63 times less return on investment than Chevron Corp. But when comparing it to its historical volatility, Guggenheim Macro Opportunities is 9.51 times less risky than Chevron Corp. It trades about 0.03 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  8,224  in Chevron Corp on May 9, 2022 and sell it today you would earn a total of  7,140  from holding Chevron Corp or generate 86.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Guggenheim Macro Opportunities  vs.  Chevron Corp

 Performance (%) 
       Timeline  
Guggenheim Macro Opp 
Guggenheim Performance
0 of 100
Over the last 90 days Guggenheim Macro Opportunities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Guggenheim Macro is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Guggenheim Price Channel

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Chevron Price Channel

Guggenheim Macro and Chevron Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Guggenheim Macro and Chevron Corp

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

Guggenheim Macro Opportunities

Pair trading matchups for Guggenheim Macro

The idea behind Guggenheim Macro Opportunities 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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