Correlation Between Valero Energy and CVR Energy
Can any of the company-specific risk be diversified away by investing in both Valero Energy and CVR 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 Valero Energy and CVR Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valero Energy and CVR Energy, you can compare the effects of market volatilities on Valero Energy and CVR 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 Valero Energy with a short position of CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valero Energy and CVR Energy.
Diversification Opportunities for Valero Energy and CVR Energy
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Valero and CVR is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR 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 CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Valero Energy i.e., Valero Energy and CVR Energy go up and down completely randomly.
Pair Corralation between Valero Energy and CVR Energy
Considering the 90-day investment horizon Valero Energy is expected to generate 2.78 times less return on investment than CVR Energy. But when comparing it to its historical volatility, Valero Energy is 1.58 times less risky than CVR Energy. It trades about 0.07 of its potential returns per unit of risk. CVR Energy is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,597 in CVR Energy on November 1, 2024 and sell it today you would earn a total of 310.00 from holding CVR Energy or generate 19.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valero Energy vs. CVR Energy
Performance |
| Timeline |
| Valero Energy |
| CVR Energy |
Valero Energy and CVR Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valero Energy and CVR Energy
The main advantage of trading using opposite Valero Energy and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valero Energy position performs unexpectedly, CVR 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 CVR Energy will offset losses from the drop in CVR Energy's long position.| Valero Energy vs. Phillips 66 | Valero Energy vs. HF Sinclair Corp | Valero Energy vs. PBF Energy | Valero Energy vs. CVR Energy |
| CVR Energy vs. Delek Logistics Partners | CVR Energy vs. PBF Energy | CVR Energy vs. HF Sinclair Corp | CVR Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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