Correlation Between Chevron Corp and Akamai Technologies

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and Akamai Technologies 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 Akamai Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and Akamai Technologies, you can compare the effects of market volatilities on Chevron Corp and Akamai Technologies 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 Akamai Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and Akamai Technologies.

Diversification Opportunities for Chevron Corp and Akamai Technologies

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Chevron and Akamai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Akamai Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akamai Technologies 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 Akamai Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akamai Technologies has no effect on the direction of Chevron Corp i.e., Chevron Corp and Akamai Technologies go up and down completely randomly.

Pair Corralation between Chevron Corp and Akamai Technologies

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.13 times more return on investment than Akamai Technologies. However, Chevron Corp is 1.13 times more volatile than Akamai Technologies. It trades about 0.08 of its potential returns per unit of risk. Akamai Technologies is currently generating about -0.01 per unit of risk. If you would invest  8,054  in Chevron Corp on May 10, 2022 and sell it today you would earn a total of  7,375  from holding Chevron Corp or generate 91.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Chevron Corp  vs.  Akamai Technologies

 Performance (%) 
       Timeline  
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

Akamai Technologies 
Akamai Performance
0 of 100
Over the last 90 days Akamai Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Akamai Technologies is not utilizing all of its potentials. The current stock price chaos, may contribute to medium-term losses for the stakeholders.

Akamai Price Channel

Chevron Corp and Akamai Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chevron Corp and Akamai Technologies

The main advantage of trading using opposite Chevron Corp and Akamai Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Akamai Technologies 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 Akamai Technologies will offset losses from the drop in Akamai Technologies' long position.
The idea behind Chevron Corp and Akamai Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Portfolio Manager
State of the art Portfolio Manager to monitor and improve performance of your invested capital
Go
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Portfolio File Import
Quickly import all of your third-party portfolios from your local drive in csv format
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Go