Correlation Between Chevron Corp and WisdomTree Inflation

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

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

Diversification Opportunities for Chevron Corp and WisdomTree Inflation

0.5

Correlation Coefficient

Chevron Corp  WisdomTree Inflation

Very weak diversification

The 3 months correlation between Chevron and WisdomTree is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and WisdomTree Inflation Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Inflation Plus 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 WisdomTree Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Inflation Plus has no effect on the direction of Chevron Corp i.e., Chevron Corp and WisdomTree Inflation go up and down completely randomly.

Pair Corralation between Chevron Corp and WisdomTree Inflation

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.73 times more return on investment than WisdomTree Inflation. However, Chevron Corp is 1.73 times more volatile than WisdomTree Inflation Plus. It trades about 0.18 of its potential returns per unit of risk. WisdomTree Inflation Plus is currently generating about 0.04 per unit of risk. If you would invest  13,416  in Chevron Corp on May 7, 2025 and sell it today you would earn a total of  1,888  from holding Chevron Corp or generate 14.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	53.23%
Values	Daily Returns

Chevron Corp  vs.  WisdomTree Inflation Plus

Chevron Corp

Risk-Adjusted Performance

Good

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

WisdomTree Inflation Plus

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree Inflation Plus are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, WisdomTree Inflation is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Chevron Corp and WisdomTree Inflation

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

The idea behind Chevron Corp and WisdomTree Inflation Plus 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.