Correlation Between Chevron Corp and Atlantic Wind

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

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

Diversification Opportunities for Chevron Corp and Atlantic Wind

-0.77

Correlation Coefficient

Chevron Corp  Atlantic Wind

Pay attention - limited upside

The 3 months correlation between Chevron and Atlantic is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Atlantic Wind Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Wind Solar 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 Atlantic Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Wind Solar has no effect on the direction of Chevron Corp i.e., Chevron Corp and Atlantic Wind go up and down completely randomly.

Pair Corralation between Chevron Corp and Atlantic Wind

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.14 times more return on investment than Atlantic Wind. However, Chevron Corp is 6.94 times less risky than Atlantic Wind. It trades about 0.21 of its potential returns per unit of risk. Atlantic Wind Solar is currently generating about -0.04 per unit of risk. If you would invest  14,064  in Chevron Corp on September 4, 2024 and sell it today you would earn a total of  2,157  from holding Chevron Corp or generate 15.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Chevron Corp  vs.  Atlantic Wind Solar

Chevron Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 16 (%) 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.

Atlantic Wind Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Atlantic Wind Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Chevron Corp and Atlantic Wind

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

The idea behind Chevron Corp and Atlantic Wind Solar 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.