Correlation Between Chevron Corp and ARK Venture

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

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

Diversification Opportunities for Chevron Corp and ARK Venture

0.88

Correlation Coefficient

Chevron Corp  ARK Venture

Very poor diversification

The 3 months correlation between Chevron and ARK is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and ARK Venture Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARK Venture Fund 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 ARK Venture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARK Venture Fund has no effect on the direction of Chevron Corp i.e., Chevron Corp and ARK Venture go up and down completely randomly.

Pair Corralation between Chevron Corp and ARK Venture

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.35 times less return on investment than ARK Venture. In addition to that, Chevron Corp is 1.38 times more volatile than ARK Venture Fund. It trades about 0.15 of its total potential returns per unit of risk. ARK Venture Fund is currently generating about 0.28 per unit of volatility. If you would invest  2,591  in ARK Venture Fund on September 13, 2024 and sell it today you would earn a total of  408.00  from holding ARK Venture Fund or generate 15.75% return on investment over 90 days.

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

Chevron Corp  vs.  ARK Venture Fund

Chevron Corp

Risk-Adjusted Performance

11 of 100

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 inconsistent basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ARK Venture Fund

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARK Venture Fund are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, ARK Venture showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chevron Corp and ARK Venture

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

The idea behind Chevron Corp and ARK Venture Fund 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.