Correlation Between Chevron Corp and Grayscale Stellar

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

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

Diversification Opportunities for Chevron Corp and Grayscale Stellar

0.65

Correlation Coefficient

Chevron Corp  Grayscale Stellar

Poor diversification

The 3 months correlation between Chevron and Grayscale is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Grayscale Stellar Lumens in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grayscale Stellar Lumens 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 Grayscale Stellar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grayscale Stellar Lumens has no effect on the direction of Chevron Corp i.e., Chevron Corp and Grayscale Stellar go up and down completely randomly.

Pair Corralation between Chevron Corp and Grayscale Stellar

Considering the 90-day investment horizon Chevron Corp is expected to generate 106.2 times less return on investment than Grayscale Stellar. But when comparing it to its historical volatility, Chevron Corp is 7.14 times less risky than Grayscale Stellar. It trades about 0.01 of its potential returns per unit of risk. Grayscale Stellar Lumens is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,320  in Grayscale Stellar Lumens on September 19, 2024 and sell it today you would earn a total of  2,280  from holding Grayscale Stellar Lumens or generate 98.28% return on investment over 90 days.

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

Chevron Corp  vs.  Grayscale Stellar Lumens

Chevron Corp

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Chevron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Grayscale Stellar Lumens

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Grayscale Stellar Lumens are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Grayscale Stellar displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chevron Corp and Grayscale Stellar

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

The idea behind Chevron Corp and Grayscale Stellar Lumens 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.