Correlation Between Chevron Corp and WisdomTree Japan
Can any of the company-specific risk be diversified away by investing in both Chevron Corp and WisdomTree Japan 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 WisdomTree Japan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chevron Corp and WisdomTree Japan SmallCap, you can compare the effects of market volatilities on Chevron Corp and WisdomTree Japan 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 WisdomTree Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chevron Corp and WisdomTree Japan.
Diversification Opportunities for Chevron Corp and WisdomTree Japan
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chevron and WisdomTree is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Chevron Corp and WisdomTree Japan SmallCap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree Japan SmallCap 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 WisdomTree Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree Japan SmallCap has no effect on the direction of Chevron Corp i.e., Chevron Corp and WisdomTree Japan go up and down completely randomly.
Pair Corralation between Chevron Corp and WisdomTree Japan
Considering the 90-day investment horizon Chevron Corp is expected to generate 1.31 times less return on investment than WisdomTree Japan. In addition to that, Chevron Corp is 1.19 times more volatile than WisdomTree Japan SmallCap. It trades about 0.28 of its total potential returns per unit of risk. WisdomTree Japan SmallCap is currently generating about 0.45 per unit of volatility. If you would invest 8,694 in WisdomTree Japan SmallCap on May 31, 2025 and sell it today you would earn a total of 670.00 from holding WisdomTree Japan SmallCap or generate 7.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chevron Corp vs. WisdomTree Japan SmallCap
Performance |
| Timeline |
| Chevron Corp |
| WisdomTree Japan SmallCap |
Chevron Corp and WisdomTree Japan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chevron Corp and WisdomTree Japan
The main advantage of trading using opposite Chevron Corp and WisdomTree Japan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chevron Corp position performs unexpectedly, WisdomTree Japan 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 WisdomTree Japan will offset losses from the drop in WisdomTree Japan's long position.The idea behind Chevron Corp and WisdomTree Japan SmallCap 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.| WisdomTree Japan vs. WisdomTree Global ex US | WisdomTree Japan vs. WisdomTree Europe SmallCap | WisdomTree Japan vs. WisdomTree International MidCap | WisdomTree Japan vs. WisdomTree Global High |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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