Correlation Between Boeing and Chevron Corp

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

Diversification Opportunities for Boeing and Chevron Corp

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Boeing and Chevron is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Boeing Company and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Boeing 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 Boeing Company are associated (or correlated) with Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of Boeing i.e., Boeing and Chevron Corp go up and down completely randomly.

Pair Corralation between Boeing and Chevron Corp

Allowing for the 90-day total investment horizon Boeing Company is expected to generate 1.06 times more return on investment than Chevron Corp. However, Boeing is 1.06 times more volatile than Chevron Corp. It trades about 0.33 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.18 per unit of risk. If you would invest  13,699  in Boeing Company on May 11, 2022 and sell it today you would earn a total of  2,783  from holding Boeing Company or generate 20.32% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Boeing Company  vs.  Chevron Corp

 Performance (%) 
       Timeline  
Boeing Company 
Boeing Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Boeing Company are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Boeing sustained solid returns over the last few months and may actually be approaching a breakup point.

Boeing Price Channel

Chevron Corp 
Chevron Performance
0 of 100
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.

Chevron Price Channel

Boeing and Chevron Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Boeing and Chevron Corp

The main advantage of trading using opposite Boeing and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boeing position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp's long position.
The idea behind Boeing Company and Chevron Corp 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.
Check out your portfolio center. 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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