Correlation Between Ampol and Valero Energy
Can any of the company-specific risk be diversified away by investing in both Ampol 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 Ampol and Valero Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampol Ltd ADR and Valero Energy, you can compare the effects of market volatilities on Ampol 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 Ampol with a short position of Valero Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampol and Valero Energy.
Diversification Opportunities for Ampol and Valero Energy
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ampol and Valero is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ampol Ltd ADR and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy and Ampol 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 Ampol Ltd ADR 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 Ampol i.e., Ampol and Valero Energy go up and down completely randomly.
Pair Corralation between Ampol and Valero Energy
Assuming the 90 days horizon Ampol Ltd ADR is expected to under-perform the Valero Energy. But the pink sheet apears to be less risky and, when comparing its historical volatility, Ampol Ltd ADR is 1.12 times less risky than Valero Energy. The pink sheet trades about -0.07 of its potential returns per unit of risk. The Valero Energy is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 15,187 in Valero Energy on September 3, 2024 and sell it today you would lose (1,173) from holding Valero Energy or give up 7.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ampol Ltd ADR vs. Valero Energy
Performance |
| Timeline |
| Ampol Ltd ADR |
| Valero Energy |
Ampol and Valero Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampol and Valero Energy
The main advantage of trading using opposite Ampol and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampol 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.| Ampol vs. Ultrapar Participacoes SA | Ampol vs. Sunoco LP | Ampol vs. HF Sinclair Corp | Ampol vs. Delek Energy |
| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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