Correlation Between Chevron Corp and Growlife

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

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

Diversification Opportunities for Chevron Corp and Growlife

-0.56

Correlation Coefficient

Chevron Corp  Growlife

Excellent diversification

The 3 months correlation between Chevron and Growlife is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Growlife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Growlife 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 Growlife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Growlife has no effect on the direction of Chevron Corp i.e., Chevron Corp and Growlife go up and down completely randomly.

Pair Corralation between Chevron Corp and Growlife

Considering the 90-day investment horizon Chevron Corp is expected to generate 132.76 times less return on investment than Growlife. But when comparing it to its historical volatility, Chevron Corp is 51.02 times less risky than Growlife. It trades about 0.04 of its potential returns per unit of risk. Growlife is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Growlife on September 20, 2024 and sell it today you would lose (0.03) from holding Growlife or give up 75.0% of portfolio value over 90 days.

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

Chevron Corp  vs.  Growlife

Chevron Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

Growlife

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Growlife are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Growlife unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chevron Corp and Growlife

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

The idea behind Chevron Corp and Growlife 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.