Correlation Between Lupatech and Valero Energy
Can any of the company-specific risk be diversified away by investing in both Lupatech 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 Lupatech and Valero Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lupatech SA and Valero Energy, you can compare the effects of market volatilities on Lupatech 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 Lupatech with a short position of Valero Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lupatech and Valero Energy.
Diversification Opportunities for Lupatech and Valero Energy
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lupatech and Valero is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lupatech SA and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy and Lupatech 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 Lupatech SA 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 Lupatech i.e., Lupatech and Valero Energy go up and down completely randomly.
Pair Corralation between Lupatech and Valero Energy
Assuming the 90 days trading horizon Lupatech SA is expected to under-perform the Valero Energy. In addition to that, Lupatech is 1.87 times more volatile than Valero Energy. It trades about -0.08 of its total potential returns per unit of risk. Valero Energy is currently generating about 0.12 per unit of volatility. If you would invest 39,184 in Valero Energy on September 12, 2024 and sell it today you would earn a total of 1,488 from holding Valero Energy or generate 3.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Lupatech SA vs. Valero Energy
Performance |
| Timeline |
| Lupatech SA |
| Valero Energy |
Lupatech and Valero Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lupatech and Valero Energy
The main advantage of trading using opposite Lupatech and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lupatech 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.| Lupatech vs. PDG Realty SA | Lupatech vs. Positivo Tecnologia SA | Lupatech vs. Rossi Residencial SA | Lupatech vs. Gafisa SA |
| Valero Energy vs. Broadcom | Valero Energy vs. MAHLE Metal Leve | Valero Energy vs. Cognizant Technology Solutions | Valero Energy vs. Paycom Software |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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