Correlation Between Chevron Corp and Bar Harbor

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

Diversification Opportunities for Chevron Corp and Bar Harbor

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Chevron and Bar Harbor is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Bar Harbor Bankshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bar Harbor Bankshares 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 Bar Harbor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bar Harbor Bankshares has no effect on the direction of Chevron Corp i.e., Chevron Corp and Bar Harbor go up and down completely randomly.

Pair Corralation between Chevron Corp and Bar Harbor

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.01 times more return on investment than Bar Harbor. However, Chevron Corp is 1.01 times more volatile than Bar Harbor Bankshares. It trades about 0.1 of its potential returns per unit of risk. Bar Harbor Bankshares is currently generating about 0.02 per unit of risk. If you would invest  11,216  in Chevron Corp on September 1, 2022 and sell it today you would earn a total of  6,887  from holding Chevron Corp or generate 61.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Chevron Corp  vs.  Bar Harbor Bankshares

 Performance (%) 
       Timeline  
Chevron Corp 
Chevron Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 10 (%) 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.

Chevron Price Channel

Bar Harbor Bankshares 
Bar Harbor Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Bar Harbor Bankshares are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical indicators, Bar Harbor may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Bar Harbor Price Channel

Chevron Corp and Bar Harbor Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chevron Corp and Bar Harbor

The main advantage of trading using opposite Chevron Corp and Bar Harbor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Bar Harbor 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 Bar Harbor will offset losses from the drop in Bar Harbor's long position.
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The idea behind Chevron Corp and Bar Harbor Bankshares 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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