Correlation Between Ideanomics and Chevron Corp

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

Diversification Opportunities for Ideanomics and Chevron Corp

0.77
  Correlation Coefficient

Poor diversification

The 1 month correlation between Ideanomics and Chevron is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ideanomics and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Ideanomics 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 Ideanomics are associated (or correlated) with Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of Ideanomics i.e., Ideanomics and Chevron Corp go up and down completely randomly.

Pair Corralation between Ideanomics and Chevron Corp

Given the investment horizon of 90 days Ideanomics is expected to under-perform the Chevron Corp. In addition to that, Ideanomics is 1.99 times more volatile than Chevron Corp. It trades about -0.33 of its total potential returns per unit of risk. Chevron Corp is currently generating about 0.06 per unit of volatility. If you would invest  14,078  in Chevron Corp on July 6, 2022 and sell it today you would earn a total of  1,095  from holding Chevron Corp or generate 7.78% return on investment over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ideanomics  vs.  Chevron Corp

 Performance (%) 
       Timeline  
Ideanomics 
Ideanomics Performance
0 of 100
Over the last 90 days Ideanomics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Ideanomics Price Channel

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.

Chevron Price Channel

Ideanomics and Chevron Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ideanomics and Chevron Corp

The main advantage of trading using opposite Ideanomics and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ideanomics position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp's long position.
Ideanomics vs. Amazon Inc
The idea behind Ideanomics and Chevron Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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