Correlation Between Valvoline and Cosan SA
Can any of the company-specific risk be diversified away by investing in both Valvoline and Cosan SA 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 Cosan SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Cosan SA ADR, you can compare the effects of market volatilities on Valvoline and Cosan SA 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 Cosan SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Cosan SA.
Diversification Opportunities for Valvoline and Cosan SA
Significant diversification
The 3 months correlation between Valvoline and Cosan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Cosan SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosan SA ADR 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 Cosan SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosan SA ADR has no effect on the direction of Valvoline i.e., Valvoline and Cosan SA go up and down completely randomly.
Pair Corralation between Valvoline and Cosan SA
Considering the 90-day investment horizon Valvoline is expected to generate 0.8 times more return on investment than Cosan SA. However, Valvoline is 1.26 times less risky than Cosan SA. It trades about -0.02 of its potential returns per unit of risk. Cosan SA ADR is currently generating about -0.12 per unit of risk. If you would invest 4,264 in Valvoline on August 27, 2024 and sell it today you would lose (407.00) from holding Valvoline or give up 9.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. Cosan SA ADR
Performance |
| Timeline |
| Valvoline |
| Cosan SA ADR |
Valvoline and Cosan SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and Cosan SA
The main advantage of trading using opposite Valvoline and Cosan SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline position performs unexpectedly, Cosan SA 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 Cosan SA will offset losses from the drop in Cosan SA's long position.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| Cosan SA vs. Delek Energy | Cosan SA vs. Crossamerica Partners LP | Cosan SA vs. Valvoline | Cosan SA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio |