Correlation Between IShares MSCI and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both IShares MSCI 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 IShares MSCI and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI EAFE and Chevron Corp, you can compare the effects of market volatilities on IShares MSCI 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 IShares MSCI with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Chevron Corp.
Diversification Opportunities for IShares MSCI and Chevron Corp
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IShares and Chevron is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI EAFE and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and IShares MSCI 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 iShares MSCI EAFE 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 IShares MSCI i.e., IShares MSCI and Chevron Corp go up and down completely randomly.
Pair Corralation between IShares MSCI and Chevron Corp
Considering the 90-day investment horizon iShares MSCI EAFE is expected to under-perform the Chevron Corp. But the etf apears to be less risky and, when comparing its historical volatility, iShares MSCI EAFE is 1.03 times less risky than Chevron Corp. The etf trades about -0.18 of its potential returns per unit of risk. The Chevron Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 15,662 in Chevron Corp on January 19, 2024 and sell it today you would lose (22.00) from holding Chevron Corp or give up 0.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
iShares MSCI EAFE vs. Chevron Corp
Performance |
| Timeline |
| iShares MSCI EAFE |
| Chevron Corp |
IShares MSCI and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Chevron Corp
The main advantage of trading using opposite IShares MSCI and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI 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.| IShares MSCI vs. Vanguard FTSE All World | IShares MSCI vs. iShares MSCI Intl | IShares MSCI vs. Dimensional ETF Trust |
| Chevron Corp vs. BP PLC ADR | Chevron Corp vs. Shell PLC ADR | Chevron Corp vs. Petroleo Brasileiro Petrobras | Chevron Corp vs. Suncor Energy |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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