Correlation Between Ultrapar Participacoes and Valero Energy
Can any of the company-specific risk be diversified away by investing in both Ultrapar Participacoes 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 Ultrapar Participacoes and Valero Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultrapar Participacoes SA and Valero Energy, you can compare the effects of market volatilities on Ultrapar Participacoes 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 Ultrapar Participacoes with a short position of Valero Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrapar Participacoes and Valero Energy.
Diversification Opportunities for Ultrapar Participacoes and Valero Energy
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ultrapar and Valero is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Ultrapar Participacoes SA and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy and Ultrapar Participacoes 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 Ultrapar Participacoes 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 Ultrapar Participacoes i.e., Ultrapar Participacoes and Valero Energy go up and down completely randomly.
Pair Corralation between Ultrapar Participacoes and Valero Energy
Considering the 90-day investment horizon Ultrapar Participacoes is expected to generate 1.58 times less return on investment than Valero Energy. In addition to that, Ultrapar Participacoes is 1.05 times more volatile than Valero Energy. It trades about 0.1 of its total potential returns per unit of risk. Valero Energy is currently generating about 0.16 per unit of volatility. If you would invest 12,418 in Valero Energy on November 9, 2024 and sell it today you would earn a total of 1,011 from holding Valero Energy or generate 8.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultrapar Participacoes SA vs. Valero Energy
Performance |
| Timeline |
| Ultrapar Participacoes |
| Valero Energy |
Ultrapar Participacoes and Valero Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultrapar Participacoes and Valero Energy
The main advantage of trading using opposite Ultrapar Participacoes and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultrapar Participacoes 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.| Ultrapar Participacoes vs. Star Gas Partners | Ultrapar Participacoes vs. Par Pacific Holdings | Ultrapar Participacoes vs. Delek Energy | Ultrapar Participacoes vs. Crossamerica Partners LP |
| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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