Correlation Between Chevron Corp and Cognyte Software

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

Diversification Opportunities for Chevron Corp and Cognyte Software

-0.63
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Chevron and Cognyte is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and Cognyte Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognyte Software 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 Cognyte Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognyte Software has no effect on the direction of Chevron Corp i.e., Chevron Corp and Cognyte Software go up and down completely randomly.

Pair Corralation between Chevron Corp and Cognyte Software

Considering the 90-day investment horizon Chevron Corp is expected to generate 6.68 times less return on investment than Cognyte Software. But when comparing it to its historical volatility, Chevron Corp is 3.75 times less risky than Cognyte Software. It trades about 0.09 of its potential returns per unit of risk. Cognyte Software is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  264.00  in Cognyte Software on August 29, 2022 and sell it today you would earn a total of  49.00  from holding Cognyte Software or generate 18.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Chevron Corp  vs.  Cognyte Software

 Performance (%) 
       Timeline  
Chevron Corp 
Chevron Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chevron Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Chevron Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Chevron Price Channel

Cognyte Software 
Cognyte Performance
0 of 100
Over the last 90 days Cognyte Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of sluggish performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2022. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cognyte Price Channel

Chevron Corp and Cognyte Software Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chevron Corp and Cognyte Software

The main advantage of trading using opposite Chevron Corp and Cognyte Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Cognyte Software 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 Cognyte Software will offset losses from the drop in Cognyte Software's long position.
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The idea behind Chevron Corp and Cognyte Software 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 Watchlist Optimization module to optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm.

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