Correlation Between Great Southern and Chevron Corp

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

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

Diversification Opportunities for Great Southern and Chevron Corp

0.56

Correlation Coefficient

Great Southern  Chevron Corp

Very weak diversification

The 3 months correlation between Great and Chevron is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Great Southern Bancorp and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Great Southern 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 Great Southern 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 Great Southern i.e., Great Southern and Chevron Corp go up and down completely randomly.

Pair Corralation between Great Southern and Chevron Corp

Given the investment horizon of 90 days Great Southern is expected to generate 5.19 times less return on investment than Chevron Corp. In addition to that, Great Southern is 1.27 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 0.13 per unit of volatility. If you would invest  15,803  in Chevron Corp on March 2, 2024 and sell it today you would earn a total of  427.00  from holding Chevron Corp or generate 2.7% return on investment over 90 days.

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

Great Southern Bancorp  vs.  Chevron Corp

Great Southern Bancorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Great Southern Bancorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, Great Southern is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Chevron Corp

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with Great Southern and Chevron Corp

The main advantage of trading using opposite Great Southern and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Southern 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 Great Southern 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..