Correlation Between Chevron Corp and Living Cell

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Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Living Cell 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 Living Cell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Living Cell Technologies, you can compare the effects of market volatilities on Chevron Corp and Living Cell 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 Living Cell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Living Cell.

Diversification Opportunities for Chevron Corp and Living Cell

ChevronLivingDiversified AwayChevronLivingDiversified Away100%
-0.59
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Chevron and Living is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Living Cell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Living Cell Technologies 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 Living Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Living Cell Technologies has no effect on the direction of Chevron Corp i.e., Chevron Corp and Living Cell go up and down completely randomly.

Pair Corralation between Chevron Corp and Living Cell

Considering the 90-day investment horizon Chevron Corp is expected to generate 0.13 times more return on investment than Living Cell. However, Chevron Corp is 7.83 times less risky than Living Cell. It trades about 0.13 of its potential returns per unit of risk. Living Cell Technologies is currently generating about -0.04 per unit of risk. If you would invest  14,066  in Chevron Corp on September 15, 2024 and sell it today you would earn a total of  1,321  from holding Chevron Corp or generate 9.39% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.46%
ValuesDaily Returns

Chevron Corp  vs.  Living Cell Technologies

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -60-40-200
JavaScript chart by amCharts 3.21.15CVX LVCLF
       Timeline  
Chevron Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 10 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec140145150155160165
Living Cell Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Living Cell Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.0040.0050.0060.0070.0080.0090.01

Chevron Corp and Living Cell Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.52-2.63-1.75-0.870.00.941.892.843.79 0.050.100.150.200.250.30
JavaScript chart by amCharts 3.21.15CVX LVCLF
       Returns  

Pair Trading with Chevron Corp and Living Cell

The main advantage of trading using opposite Chevron Corp and Living Cell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Living Cell 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 Living Cell will offset losses from the drop in Living Cell's long position.
The idea behind Chevron Corp and Living Cell Technologies 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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