Correlation Between CHEVRON CDR and RioCan Real

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

By analyzing existing cross correlation between CHEVRON CDR and RioCan Real Estate, you can compare the effects of market volatilities on CHEVRON CDR and RioCan Real 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 CDR with a short position of RioCan Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEVRON CDR and RioCan Real.

Diversification Opportunities for CHEVRON CDR and RioCan Real

-0.54

Correlation Coefficient

CHEVRON CDR  RioCan Real

Excellent diversification

The 3 months correlation between CHEVRON and RioCan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding CHEVRON CDR and RioCan Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RioCan Real Estate and CHEVRON CDR 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 CDR are associated (or correlated) with RioCan Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RioCan Real Estate has no effect on the direction of CHEVRON CDR i.e., CHEVRON CDR and RioCan Real go up and down completely randomly.

Pair Corralation between CHEVRON CDR and RioCan Real

Assuming the 90 days trading horizon CHEVRON CDR is expected to generate 0.97 times more return on investment than RioCan Real. However, CHEVRON CDR is 1.03 times less risky than RioCan Real. It trades about 0.18 of its potential returns per unit of risk. RioCan Real Estate is currently generating about 0.03 per unit of risk. If you would invest  1,923  in CHEVRON CDR on September 3, 2024 and sell it today you would earn a total of  264.00  from holding CHEVRON CDR or generate 13.73% return on investment over 90 days.

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

CHEVRON CDR  vs.  RioCan Real Estate

CHEVRON CDR

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHEVRON CDR are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, CHEVRON CDR exhibited solid returns over the last few months and may actually be approaching a breakup point.

RioCan Real Estate

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RioCan Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong forward indicators, RioCan Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CHEVRON CDR and RioCan Real

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

The idea behind CHEVRON CDR and RioCan Real Estate 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.