Correlation Between Valvoline and Adams Resources
Can any of the company-specific risk be diversified away by investing in both Valvoline and Adams Resources 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 Valvoline and Adams Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Adams Resources Energy, you can compare the effects of market volatilities on Valvoline and Adams Resources 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 Valvoline with a short position of Adams Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Adams Resources.
Diversification Opportunities for Valvoline and Adams Resources
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Valvoline and Adams is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Adams Resources Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adams Resources Energy and Valvoline 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 Valvoline are associated (or correlated) with Adams Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adams Resources Energy has no effect on the direction of Valvoline i.e., Valvoline and Adams Resources go up and down completely randomly.
Pair Corralation between Valvoline and Adams Resources
Considering the 90-day investment horizon Valvoline is expected to under-perform the Adams Resources. But the stock apears to be less risky and, when comparing its historical volatility, Valvoline is 3.36 times less risky than Adams Resources. The stock trades about -0.17 of its potential returns per unit of risk. The Adams Resources Energy is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 2,695 in Adams Resources Energy on August 27, 2024 and sell it today you would earn a total of 1,025 from holding Adams Resources Energy or generate 38.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. Adams Resources Energy
Performance |
| Timeline |
| Valvoline |
| Adams Resources Energy |
Valvoline and Adams Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and Adams Resources
The main advantage of trading using opposite Valvoline and Adams Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline position performs unexpectedly, Adams Resources 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 Adams Resources will offset losses from the drop in Adams Resources' long position.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| Adams Resources vs. Delek Energy | Adams Resources vs. Crossamerica Partners LP | Adams Resources vs. Valvoline | Adams Resources vs. Star Gas Partners |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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