Correlation Between Chevron Corp and JGC Corp

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

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

Diversification Opportunities for Chevron Corp and JGC Corp

-0.43

Correlation Coefficient

Chevron Corp  JGC Corp

Very good diversification

The 3 months correlation between Chevron and JGC is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and JGC Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JGC Corp 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 JGC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JGC Corp has no effect on the direction of Chevron Corp i.e., Chevron Corp and JGC Corp go up and down completely randomly.

Pair Corralation between Chevron Corp and JGC Corp

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.59 times more return on investment than JGC Corp. However, Chevron Corp is 1.69 times less risky than JGC Corp. It trades about 0.17 of its potential returns per unit of risk. JGC Corp is currently generating about -0.02 per unit of risk. If you would invest  14,320  in Chevron Corp on September 2, 2024 and sell it today you would earn a total of  1,873  from holding Chevron Corp or generate 13.08% return on investment over 90 days.

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

Chevron Corp  vs.  JGC Corp

Chevron Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Chevron Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

JGC Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JGC Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, JGC Corp 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 Corp and JGC Corp

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

The idea behind Chevron Corp and JGC Corp 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.