Correlation Between OPTIMUM FIXED and Chevron Corp

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

Diversification Opportunities for OPTIMUM FIXED and Chevron Corp

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between OPTIMUM and Chevron is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding OPTIMUM FIXED INCOME and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and OPTIMUM FIXED 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 OPTIMUM FIXED INCOME 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 OPTIMUM FIXED i.e., OPTIMUM FIXED and Chevron Corp go up and down completely randomly.

Pair Corralation between OPTIMUM FIXED and Chevron Corp

Assuming the 90 days horizon OPTIMUM FIXED INCOME is expected to generate 0.32 times more return on investment than Chevron Corp. However, OPTIMUM FIXED INCOME is 3.15 times less risky than Chevron Corp. It trades about 0.53 of its potential returns per unit of risk. Chevron Corp is currently generating about -0.11 per unit of risk. If you would invest  790.00  in OPTIMUM FIXED INCOME on September 6, 2022 and sell it today you would earn a total of  46.00  from holding OPTIMUM FIXED INCOME or generate 5.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.24%
ValuesDaily Returns

OPTIMUM FIXED INCOME  vs.  Chevron Corp

 Performance (%) 
       Timeline  
OPTIMUM FIXED INCOME 
OPTIMUM Performance
0 of 100
Over the last 90 days OPTIMUM FIXED INCOME has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, OPTIMUM FIXED is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

OPTIMUM Price Channel

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 inconsistent basic indicators, Chevron Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Chevron Price Channel

OPTIMUM FIXED and Chevron Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with OPTIMUM FIXED and Chevron Corp

The main advantage of trading using opposite OPTIMUM FIXED and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPTIMUM FIXED 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.
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The idea behind OPTIMUM FIXED INCOME 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.
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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 Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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