Correlation Between FBD Holdings and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both FBD Holdings 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 FBD Holdings and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FBD Holdings PLC and Chevron Corp, you can compare the effects of market volatilities on FBD Holdings 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 FBD Holdings with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of FBD Holdings and Chevron Corp.
Diversification Opportunities for FBD Holdings and Chevron Corp
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FBD and Chevron is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding FBD Holdings PLC and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and FBD Holdings 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 FBD Holdings PLC 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 FBD Holdings i.e., FBD Holdings and Chevron Corp go up and down completely randomly.
Pair Corralation between FBD Holdings and Chevron Corp
Assuming the 90 days trading horizon FBD Holdings PLC is expected to generate 1.77 times more return on investment than Chevron Corp. However, FBD Holdings is 1.77 times more volatile than Chevron Corp. It trades about 0.27 of its potential returns per unit of risk. Chevron Corp is currently generating about 0.09 per unit of risk. If you would invest 1,270 in FBD Holdings PLC on January 17, 2024 and sell it today you would earn a total of 95.00 from holding FBD Holdings PLC or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FBD Holdings PLC vs. Chevron Corp
Performance |
| Timeline |
| FBD Holdings PLC |
| Chevron Corp |
FBD Holdings and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FBD Holdings and Chevron Corp
The main advantage of trading using opposite FBD Holdings and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FBD Holdings 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.| FBD Holdings vs. Glanbia PLC | FBD Holdings vs. CRH PLC | FBD Holdings vs. Kingspan Group plc | FBD Holdings vs. Kerry Group |
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 the Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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