Correlation Between Crossamerica Partners and Valero Energy
Can any of the company-specific risk be diversified away by investing in both Crossamerica Partners and Valero Energy 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 Crossamerica Partners and Valero Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crossamerica Partners LP and Valero Energy, you can compare the effects of market volatilities on Crossamerica Partners and Valero Energy 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 Crossamerica Partners with a short position of Valero Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crossamerica Partners and Valero Energy.
Diversification Opportunities for Crossamerica Partners and Valero Energy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Crossamerica and Valero is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Crossamerica Partners LP and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy and Crossamerica Partners 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 Crossamerica Partners LP are associated (or correlated) with Valero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valero Energy has no effect on the direction of Crossamerica Partners i.e., Crossamerica Partners and Valero Energy go up and down completely randomly.
Pair Corralation between Crossamerica Partners and Valero Energy
Given the investment horizon of 90 days Crossamerica Partners LP is expected to under-perform the Valero Energy. But the stock apears to be less risky and, when comparing its historical volatility, Crossamerica Partners LP is 1.01 times less risky than Valero Energy. The stock trades about -0.07 of its potential returns per unit of risk. The Valero Energy is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 13,140 in Valero Energy on August 26, 2024 and sell it today you would earn a total of 951.00 from holding Valero Energy or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crossamerica Partners LP vs. Valero Energy
Performance |
| Timeline |
| Crossamerica Partners |
| Valero Energy |
Crossamerica Partners and Valero Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crossamerica Partners and Valero Energy
The main advantage of trading using opposite Crossamerica Partners and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crossamerica Partners position performs unexpectedly, Valero Energy 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 Valero Energy will offset losses from the drop in Valero Energy's long position.| Crossamerica Partners vs. Delek Energy | Crossamerica Partners vs. Sunoco LP | Crossamerica Partners vs. CVR Energy | Crossamerica Partners vs. Phillips 66 |
| Valero Energy vs. Phillips 66 | Valero Energy vs. HF Sinclair Corp | Valero Energy vs. PBF Energy | Valero Energy vs. CVR Energy |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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