Correlation Between Kepler Weber and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Kepler Weber 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 Kepler Weber and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kepler Weber SA and Chevron Corp, you can compare the effects of market volatilities on Kepler Weber 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 Kepler Weber with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kepler Weber and Chevron Corp.
Diversification Opportunities for Kepler Weber and Chevron Corp
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kepler and Chevron is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Kepler Weber SA and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Kepler Weber 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 Kepler Weber SA 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 Kepler Weber i.e., Kepler Weber and Chevron Corp go up and down completely randomly.
Pair Corralation between Kepler Weber and Chevron Corp
Assuming the 90 days trading horizon Kepler Weber SA is expected to under-perform the Chevron Corp. In addition to that, Kepler Weber is 3.38 times more volatile than Chevron Corp. It trades about -0.01 of its total potential returns per unit of risk. Chevron Corp is currently generating about 0.2 per unit of volatility. If you would invest 15,486 in Chevron Corp on January 21, 2024 and sell it today you would earn a total of 514.00 from holding Chevron Corp or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Kepler Weber SA vs. Chevron Corp
Performance |
| Timeline |
| Kepler Weber SA |
| Chevron Corp |
Kepler Weber and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kepler Weber and Chevron Corp
The main advantage of trading using opposite Kepler Weber and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kepler Weber 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 Kepler Weber SA 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 the Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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