Correlation Between Valero Energy and Crossamerica Partners
Can any of the company-specific risk be diversified away by investing in both Valero Energy and Crossamerica Partners 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 Crossamerica Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valero Energy and Crossamerica Partners LP, you can compare the effects of market volatilities on Valero Energy and Crossamerica Partners 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 Crossamerica Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valero Energy and Crossamerica Partners.
Diversification Opportunities for Valero Energy and Crossamerica Partners
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valero and Crossamerica is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners 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 Crossamerica Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossamerica Partners has no effect on the direction of Valero Energy i.e., Valero Energy and Crossamerica Partners go up and down completely randomly.
Pair Corralation between Valero Energy and Crossamerica Partners
Considering the 90-day investment horizon Valero Energy is expected to generate 1.0 times more return on investment than Crossamerica Partners. However, Valero Energy is 1.0 times less risky than Crossamerica Partners. It trades about 0.12 of its potential returns per unit of risk. Crossamerica Partners LP is currently generating about -0.04 per unit of risk. If you would invest 13,469 in Valero Energy on August 23, 2024 and sell it today you would earn a total of 642.00 from holding Valero Energy or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valero Energy vs. Crossamerica Partners LP
Performance |
| Timeline |
| Valero Energy |
| Crossamerica Partners |
Valero Energy and Crossamerica Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valero Energy and Crossamerica Partners
The main advantage of trading using opposite Valero Energy and Crossamerica Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valero Energy position performs unexpectedly, Crossamerica Partners 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 Crossamerica Partners will offset losses from the drop in Crossamerica Partners' long position.| Valero Energy vs. Phillips 66 | Valero Energy vs. HF Sinclair Corp | Valero Energy vs. PBF Energy | Valero Energy vs. CVR Energy |
| Crossamerica Partners vs. Delek Energy | Crossamerica Partners vs. Sunoco LP | Crossamerica Partners vs. CVR Energy | Crossamerica Partners vs. Phillips 66 |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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