Correlation Between Chevron Corp and YPF Sociedad

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

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

Diversification Opportunities for Chevron Corp and YPF Sociedad

0.59

Correlation Coefficient

Chevron Corp  YPF Sociedad

Very weak diversification

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

Pair Corralation between Chevron Corp and YPF Sociedad

Considering the 90-day investment horizon Chevron Corp is expected to under-perform the YPF Sociedad. But the stock apears to be less risky and, when comparing its historical volatility, Chevron Corp is 2.64 times less risky than YPF Sociedad. The stock trades about -0.01 of its potential returns per unit of risk. The YPF Sociedad Anonima is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  871.00  in YPF Sociedad Anonima on September 21, 2024 and sell it today you would earn a total of  3,368  from holding YPF Sociedad Anonima or generate 386.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Chevron Corp  vs.  YPF Sociedad Anonima

Chevron Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chevron Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Chevron Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

YPF Sociedad Anonima

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in YPF Sociedad Anonima are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, YPF Sociedad reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chevron Corp and YPF Sociedad

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

The idea behind Chevron Corp and YPF Sociedad Anonima 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.