Correlation Between Chevron Corp and Travelers Companies

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

Diversification Opportunities for Chevron Corp and Travelers Companies

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Chevron and Travelers is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and The Travelers Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Travelers Companies 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 Travelers Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Travelers Companies has no effect on the direction of Chevron Corp i.e., Chevron Corp and Travelers Companies go up and down completely randomly.

Pair Corralation between Chevron Corp and Travelers Companies

Considering the 90-day investment horizon Chevron Corp is expected to generate 1.31 times more return on investment than Travelers Companies. However, Chevron Corp is 1.31 times more volatile than The Travelers Companies. It trades about 0.08 of its potential returns per unit of risk. The Travelers Companies is currently generating about 0.07 per unit of risk. If you would invest  7,820  in Chevron Corp on May 13, 2022 and sell it today you would earn a total of  8,147  from holding Chevron Corp or generate 104.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Chevron Corp  vs.  The Travelers Companies

 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 current stock price disturbance, may contribute to short-term losses for the investors.

Chevron Price Channel

The Travelers Companies 
Travelers Performance
0 of 100
Over the last 90 days The Travelers Companies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Travelers Companies is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Travelers Price Channel

Chevron Corp and Travelers Companies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chevron Corp and Travelers Companies

The main advantage of trading using opposite Chevron Corp and Travelers Companies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, Travelers Companies 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 Travelers Companies will offset losses from the drop in Travelers Companies' long position.
The idea behind Chevron Corp and The Travelers Companies 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 Transaction History module to view history of all your transactions and understand their impact on performance.

Other Complementary Tools

Earnings Calls
Check upcoming earnings announcements updated hourly across public exchanges
Go
Crypto Correlations
Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins
Go
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Go
Volatility Analysis
Get historical volatility and risk analysis based on latest market data
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go