Correlation Between Chevron Corp and EQUINOR ASA

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

Diversification Opportunities for Chevron Corp and EQUINOR ASA

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Chevron and EQUINOR is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and EQUINOR ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUINOR ASA 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 EQUINOR ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQUINOR ASA has no effect on the direction of Chevron Corp i.e., Chevron Corp and EQUINOR ASA go up and down completely randomly.

Pair Corralation between Chevron Corp and EQUINOR ASA

Considering the 90-day investment horizon Chevron Corp is expected to under-perform the EQUINOR ASA. But the stock apears to be less risky and, when comparing its historical volatility, Chevron Corp is 1.11 times less risky than EQUINOR ASA. The stock trades about -0.4 of its potential returns per unit of risk. The EQUINOR ASA is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  3,686  in EQUINOR ASA on March 28, 2022 and sell it today you would lose (311.00)  from holding EQUINOR ASA or give up 8.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Chevron Corp  vs.  EQUINOR ASA

 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 latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0399
Payout Ratio
0.52
Last Split Factor
2:1
Forward Annual Dividend Rate
5.68
Dividend Date
2022-06-10
Ex Dividend Date
2022-05-18
Last Split Date
2004-09-13

Chevron Price Channel

EQUINOR ASA 
EQUINOR Performance
0 of 100
Over the last 90 days EQUINOR ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, EQUINOR ASA is not utilizing all of its potentials. The new stock price tumult, may contribute to shorter-term losses for the shareholders.

Structure and Payout Changes

Forward Annual Dividend Yield
0.0233
Payout Ratio
0.5
Forward Annual Dividend Rate
0.8
Ex Dividend Date
2022-08-11

EQUINOR Price Channel

Chevron Corp and EQUINOR ASA Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Chevron Corp and EQUINOR ASA

The main advantage of trading using opposite Chevron Corp and EQUINOR ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, EQUINOR ASA 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 EQUINOR ASA will offset losses from the drop in EQUINOR ASA's long position.
The idea behind Chevron Corp and EQUINOR ASA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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