Correlation Between Chevron Corp and Unit

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

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

Diversification Opportunities for Chevron Corp and Unit

0.82

Correlation Coefficient

Chevron Corp  Unit

Very poor diversification

The 3 months correlation between Chevron and Unit is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit 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 Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of Chevron Corp i.e., Chevron Corp and Unit go up and down completely randomly.

Pair Corralation between Chevron Corp and Unit

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.78 times more return on investment than Unit. However, Chevron Corp is 1.29 times less risky than Unit. It trades about 0.14 of its potential returns per unit of risk. Unit Corporation is currently generating about 0.07 per unit of risk. If you would invest  13,504  in Chevron Corp on April 23, 2025 and sell it today you would earn a total of  1,500  from holding Chevron Corp or generate 11.11% return on investment over 90 days.

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

Chevron Corp  vs.  Unit Corp.

Chevron Corp

Risk-Adjusted Performance

Good

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.

Unit

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unit Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Unit may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Chevron Corp and Unit

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

The idea behind Chevron Corp and Unit Corporation 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.