Correlation Between Chevron Corp and Ladder

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

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

Diversification Opportunities for Chevron Corp and Ladder

-0.48

Correlation Coefficient

Chevron Corp  Ladder

Very good diversification

The 3 months correlation between Chevron and Ladder is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Ladder Capital Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladder Capital Finance 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 Ladder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladder Capital Finance has no effect on the direction of Chevron Corp i.e., Chevron Corp and Ladder go up and down completely randomly.

Pair Corralation between Chevron Corp and Ladder

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.67 times more return on investment than Ladder. However, Chevron Corp is 1.67 times more volatile than Ladder Capital Finance. It trades about 0.01 of its potential returns per unit of risk. Ladder Capital Finance is currently generating about 0.01 per unit of risk. If you would invest  15,214  in Chevron Corp on September 12, 2024 and sell it today you would earn a total of  449.00  from holding Chevron Corp or generate 2.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	89.43%
Values	Daily Returns

Chevron Corp  vs.  Ladder Capital Finance

Chevron Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 14 (%) 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.

Ladder Capital Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ladder Capital Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for Ladder Capital Finance investors.

Pair Trading with Chevron Corp and Ladder

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

The idea behind Chevron Corp and Ladder Capital Finance 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.