Correlation Between Chevron Corp and Perficient

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

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

Diversification Opportunities for Chevron Corp and Perficient

0.83

Correlation Coefficient

Chevron Corp  Perficient

Very poor diversification

The 3 months correlation between Chevron and Perficient is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Perficient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perficient 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 Perficient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perficient has no effect on the direction of Chevron Corp i.e., Chevron Corp and Perficient go up and down completely randomly.

Pair Corralation between Chevron Corp and Perficient

Considering the 90-day investment horizon Chevron Corp is expected to generate 5.78 times more return on investment than Perficient. However, Chevron Corp is 5.78 times more volatile than Perficient. It trades about 0.21 of its potential returns per unit of risk. Perficient is currently generating about 0.26 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 Together
Strength	Strong
Accuracy	32.81%
Values	Daily Returns

Chevron Corp  vs.  Perficient

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.

Perficient

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Perficient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Perficient is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Chevron Corp and Perficient

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

The idea behind Chevron Corp and Perficient 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.