Correlation Between Valero Energy and Blue Dolphin
Can any of the company-specific risk be diversified away by investing in both Valero Energy and Blue Dolphin 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 Blue Dolphin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valero Energy and Blue Dolphin Energy, you can compare the effects of market volatilities on Valero Energy and Blue Dolphin 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 Blue Dolphin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valero Energy and Blue Dolphin.
Diversification Opportunities for Valero Energy and Blue Dolphin
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Valero and Blue is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy and Blue Dolphin Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Dolphin Energy 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 Blue Dolphin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Dolphin Energy has no effect on the direction of Valero Energy i.e., Valero Energy and Blue Dolphin go up and down completely randomly.
Pair Corralation between Valero Energy and Blue Dolphin
Considering the 90-day investment horizon Valero Energy is expected to generate 21.84 times less return on investment than Blue Dolphin. But when comparing it to its historical volatility, Valero Energy is 3.97 times less risky than Blue Dolphin. It trades about 0.03 of its potential returns per unit of risk. Blue Dolphin Energy is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 110.00 in Blue Dolphin Energy on August 24, 2024 and sell it today you would earn a total of 496.00 from holding Blue Dolphin Energy or generate 450.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 32.12% |
| Values | Daily Returns |
Valero Energy vs. Blue Dolphin Energy
Performance |
| Timeline |
| Valero Energy |
| Blue Dolphin Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Valero Energy and Blue Dolphin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valero Energy and Blue Dolphin
The main advantage of trading using opposite Valero Energy and Blue Dolphin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valero Energy position performs unexpectedly, Blue Dolphin 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 Blue Dolphin will offset losses from the drop in Blue Dolphin's long position.| Valero Energy vs. Phillips 66 | Valero Energy vs. HF Sinclair Corp | Valero Energy vs. PBF Energy | Valero Energy vs. CVR Energy |
| Blue Dolphin vs. Aemetis | Blue Dolphin vs. PBF Energy | Blue Dolphin vs. Clean Energy Fuels | Blue Dolphin vs. Par Pacific Holdings |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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