Correlation Between Chevron Corp and CSWI Old

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

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

Diversification Opportunities for Chevron Corp and CSWI Old

0.62

Correlation Coefficient

Chevron Corp  CSWI Old

Poor diversification

The 3 months correlation between Chevron and CSWI is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and CSWI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSWI Old and Chevron Corp 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 Chevron Corp are associated (or correlated) with CSWI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSWI Old has no effect on the direction of Chevron Corp i.e., Chevron Corp and CSWI Old go up and down completely randomly.

Pair Corralation between Chevron Corp and CSWI Old

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.6 times more return on investment than CSWI Old. However, Chevron Corp is 1.67 times less risky than CSWI Old. It trades about 0.16 of its potential returns per unit of risk. CSWI Old is currently generating about -0.05 per unit of risk. If you would invest  13,762  in Chevron Corp on April 29, 2025 and sell it today you would earn a total of  1,722  from holding Chevron Corp or generate 12.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	46.77%
Values	Daily Returns

Chevron Corp  vs.  CSWI Old

Chevron Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in August 2025.

CSWI Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSWI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CSWI Old is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Chevron Corp and CSWI Old

The main advantage of trading using opposite Chevron Corp and CSWI Old positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, CSWI Old 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 CSWI Old will offset losses from the drop in CSWI Old's long position.

The idea behind Chevron Corp and CSWI Old 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.