Correlation Between Valero Energy and NESTE OYJ
Can any of the company-specific risk be diversified away by investing in both Valero Energy and NESTE OYJ 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 Valero Energy and NESTE OYJ into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valero Energy and NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Valero Energy and NESTE OYJ 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 Valero Energy with a short position of NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valero Energy and NESTE OYJ.
Diversification Opportunities for Valero Energy and NESTE OYJ
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Valero and NESTE is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR and Valero Energy 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 Valero Energy are associated (or correlated) with NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of Valero Energy i.e., Valero Energy and NESTE OYJ go up and down completely randomly.
Pair Corralation between Valero Energy and NESTE OYJ
Assuming the 90 days horizon Valero Energy is expected to generate 0.74 times more return on investment than NESTE OYJ. However, Valero Energy is 1.35 times less risky than NESTE OYJ. It trades about -0.09 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about -0.24 per unit of risk. If you would invest 12,364 in Valero Energy on September 23, 2024 and sell it today you would lose (964.00) from holding Valero Energy or give up 7.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valero Energy vs. NESTE OYJ UNSPADR
Performance |
| Timeline |
| Valero Energy |
| NESTE OYJ UNSPADR |
Valero Energy and NESTE OYJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valero Energy and NESTE OYJ
The main advantage of trading using opposite Valero Energy and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valero Energy position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.| Valero Energy vs. Reliance Industries Limited | Valero Energy vs. Marathon Petroleum Corp | Valero Energy vs. Neste Oyj | Valero Energy vs. NESTE OYJ UNSPADR |
| NESTE OYJ vs. Reliance Industries Limited | NESTE OYJ vs. Marathon Petroleum Corp | NESTE OYJ vs. Valero Energy | NESTE OYJ vs. Neste Oyj |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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