Correlation Between Valvoline and PBF Energy
Can any of the company-specific risk be diversified away by investing in both Valvoline and PBF 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 Valvoline and PBF Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and PBF Energy, you can compare the effects of market volatilities on Valvoline and PBF 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 Valvoline with a short position of PBF Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and PBF Energy.
Diversification Opportunities for Valvoline and PBF Energy
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Valvoline and PBF is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and PBF Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBF 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 PBF Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBF Energy has no effect on the direction of Valvoline i.e., Valvoline and PBF Energy go up and down completely randomly.
Pair Corralation between Valvoline and PBF Energy
Considering the 90-day investment horizon Valvoline is expected to generate 0.6 times more return on investment than PBF Energy. However, Valvoline is 1.66 times less risky than PBF Energy. It trades about 0.03 of its potential returns per unit of risk. PBF Energy is currently generating about 0.01 per unit of risk. If you would invest 3,279 in Valvoline on August 24, 2024 and sell it today you would earn a total of 577.00 from holding Valvoline or generate 17.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. PBF Energy
Performance |
| Timeline |
| Valvoline |
| PBF Energy |
Valvoline and PBF Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and PBF Energy
The main advantage of trading using opposite Valvoline and PBF Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline position performs unexpectedly, PBF 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 PBF Energy will offset losses from the drop in PBF Energy's long position.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| PBF Energy vs. Delek Energy | PBF Energy vs. CVR Energy | PBF Energy vs. Valero Energy | PBF Energy vs. Marathon Petroleum Corp |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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