Correlation Between Chevron Corp and ProShares Smart

Can any of the company-specific risk be diversified away by investing in both Chevron Corp and ProShares Smart 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 Smart 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 Smart Materials, you can compare the effects of market volatilities on Chevron Corp and ProShares Smart 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 Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and ProShares Smart.

Diversification Opportunities for Chevron Corp and ProShares Smart

0.91

Correlation Coefficient

Chevron Corp  ProShares Smart

Almost no diversification

The 3 months correlation between Chevron and ProShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ProShares Smart Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProShares Smart Materials 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 Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProShares Smart Materials has no effect on the direction of Chevron Corp i.e., Chevron Corp and ProShares Smart go up and down completely randomly.

Pair Corralation between Chevron Corp and ProShares Smart

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.01 times more return on investment than ProShares Smart. However, Chevron Corp is 1.01 times more volatile than ProShares Smart Materials. It trades about 0.19 of its potential returns per unit of risk. ProShares Smart Materials is currently generating about 0.18 per unit of risk. If you would invest  13,556  in Chevron Corp on May 21, 2025 and sell it today you would earn a total of  1,976  from holding Chevron Corp or generate 14.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Chevron Corp  vs.  ProShares Smart Materials

Chevron Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chevron Corp showed solid returns over the last few months and may actually be approaching a breakup point.

ProShares Smart Materials

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ProShares Smart Materials are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ProShares Smart unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chevron Corp and ProShares Smart

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

The idea behind Chevron Corp and ProShares Smart Materials 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.