Correlation Between Freshpet and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Freshpet 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 Freshpet and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Freshpet and Chevron Corp, you can compare the effects of market volatilities on Freshpet 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 Freshpet with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freshpet and Chevron Corp.
Diversification Opportunities for Freshpet and Chevron Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Freshpet and Chevron is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Freshpet and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Freshpet 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 Freshpet 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 Freshpet i.e., Freshpet and Chevron Corp go up and down completely randomly.
Pair Corralation between Freshpet and Chevron Corp
Given the investment horizon of 90 days Freshpet is expected to generate 1.9 times more return on investment than Chevron Corp. However, Freshpet is 1.9 times more volatile than Chevron Corp. It trades about 0.08 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.01 per unit of risk. If you would invest 6,209 in Freshpet on January 21, 2024 and sell it today you would earn a total of 4,260 from holding Freshpet or generate 68.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 99.66% |
Values | Daily Returns |
Freshpet vs. Chevron Corp
Performance |
Timeline |
Freshpet |
Chevron Corp |
Freshpet and Chevron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Freshpet and Chevron Corp
The main advantage of trading using opposite Freshpet and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freshpet 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.Freshpet vs. Green Globe International | Freshpet vs. Greenlane Holdings | Freshpet vs. 22nd Century Group | Freshpet vs. 1606 Corp |
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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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