Correlation Between Canadian Overseas and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Canadian Overseas 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 Canadian Overseas and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Overseas Petroleum and Chevron Corp, you can compare the effects of market volatilities on Canadian Overseas 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 Canadian Overseas with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Overseas and Chevron Corp.
Diversification Opportunities for Canadian Overseas and Chevron Corp
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Canadian and Chevron is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Overseas Petroleum and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Canadian Overseas 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 Canadian Overseas Petroleum 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 Canadian Overseas i.e., Canadian Overseas and Chevron Corp go up and down completely randomly.
Pair Corralation between Canadian Overseas and Chevron Corp
Assuming the 90 days horizon Canadian Overseas Petroleum is expected to generate 67.28 times more return on investment than Chevron Corp. However, Canadian Overseas is 67.28 times more volatile than Chevron Corp. It trades about 0.17 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.17 per unit of risk. If you would invest 0.08 in Canadian Overseas Petroleum on January 26, 2024 and sell it today you would earn a total of 0.12 from holding Canadian Overseas Petroleum or generate 150.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Canadian Overseas Petroleum vs. Chevron Corp
Performance |
Timeline |
Canadian Overseas |
Chevron Corp |
Canadian Overseas and Chevron Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Canadian Overseas and Chevron Corp
The main advantage of trading using opposite Canadian Overseas and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Overseas 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.Canadian Overseas vs. Valeura Energy | Canadian Overseas vs. PetroShale | Canadian Overseas vs. ShaMaran Petroleum Corp | Canadian Overseas vs. Africa Energy Corp |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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