Correlation Between CHEVRON CDR and First Quantum

Can any of the company-specific risk be diversified away by investing in both CHEVRON CDR and First Quantum 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 CDR and First Quantum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CHEVRON CDR and First Quantum Minerals, you can compare the effects of market volatilities on CHEVRON CDR and First Quantum 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 CDR with a short position of First Quantum. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHEVRON CDR and First Quantum.

Diversification Opportunities for CHEVRON CDR and First Quantum

0.8

Correlation Coefficient

CHEVRON CDR  First Quantum

Very poor diversification

The 3 months correlation between CHEVRON and First is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding CHEVRON CDR and First Quantum Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Quantum Minerals and CHEVRON CDR 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 CDR are associated (or correlated) with First Quantum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Quantum Minerals has no effect on the direction of CHEVRON CDR i.e., CHEVRON CDR and First Quantum go up and down completely randomly.

Pair Corralation between CHEVRON CDR and First Quantum

Assuming the 90 days trading horizon CHEVRON CDR is expected to generate 4.19 times less return on investment than First Quantum. But when comparing it to its historical volatility, CHEVRON CDR is 1.6 times less risky than First Quantum. It trades about 0.09 of its potential returns per unit of risk. First Quantum Minerals is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  1,666  in First Quantum Minerals on April 22, 2025 and sell it today you would earn a total of  673.00  from holding First Quantum Minerals or generate 40.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

CHEVRON CDR  vs.  First Quantum Minerals

CHEVRON CDR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CHEVRON CDR are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, CHEVRON CDR may actually be approaching a critical reversion point that can send shares even higher in August 2025.

First Quantum Minerals

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Quantum Minerals are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, First Quantum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CHEVRON CDR and First Quantum

The main advantage of trading using opposite CHEVRON CDR and First Quantum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHEVRON CDR position performs unexpectedly, First Quantum 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 First Quantum will offset losses from the drop in First Quantum's long position.

The idea behind CHEVRON CDR and First Quantum Minerals 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.