Correlation Between Chevron Corp and ProShares UltraShort

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

By analyzing existing cross correlation between Chevron Corp and ProShares UltraShort Oil, you can compare the effects of market volatilities on Chevron Corp and ProShares UltraShort 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 ProShares UltraShort. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and ProShares UltraShort.

Diversification Opportunities for Chevron Corp and ProShares UltraShort

-0.89

Correlation Coefficient

Chevron Corp  ProShares UltraShort

Pay attention - limited upside

The 3 months correlation between Chevron and ProShares is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ProShares UltraShort Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares UltraShort Oil 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 ProShares UltraShort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares UltraShort Oil has no effect on the direction of Chevron Corp i.e., Chevron Corp and ProShares UltraShort go up and down completely randomly.

Pair Corralation between Chevron Corp and ProShares UltraShort

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.53 times more return on investment than ProShares UltraShort. However, Chevron Corp is 1.89 times less risky than ProShares UltraShort. It trades about 0.15 of its potential returns per unit of risk. ProShares UltraShort Oil is currently generating about -0.07 per unit of risk. If you would invest  13,706  in Chevron Corp on April 25, 2025 and sell it today you would earn a total of  1,606  from holding Chevron Corp or generate 11.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Chevron Corp  vs.  ProShares UltraShort Oil

Chevron Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 11 (%) 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.

ProShares UltraShort Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days ProShares UltraShort Oil has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Etf's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Chevron Corp and ProShares UltraShort

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

The idea behind Chevron Corp and ProShares UltraShort Oil 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.