Correlation Between Valvoline and Star Gas
Can any of the company-specific risk be diversified away by investing in both Valvoline and Star Gas 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 Star Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valvoline and Star Gas Partners, you can compare the effects of market volatilities on Valvoline and Star Gas 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 Star Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valvoline and Star Gas.
Diversification Opportunities for Valvoline and Star Gas
Average diversification
The 3 months correlation between Valvoline and Star is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Star Gas Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Gas Partners 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 Star Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Gas Partners has no effect on the direction of Valvoline i.e., Valvoline and Star Gas go up and down completely randomly.
Pair Corralation between Valvoline and Star Gas
Considering the 90-day investment horizon Valvoline is expected to under-perform the Star Gas. In addition to that, Valvoline is 1.01 times more volatile than Star Gas Partners. It trades about -0.01 of its total potential returns per unit of risk. Star Gas Partners is currently generating about 0.09 per unit of volatility. If you would invest 1,023 in Star Gas Partners on August 24, 2024 and sell it today you would earn a total of 225.00 from holding Star Gas Partners or generate 21.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valvoline vs. Star Gas Partners
Performance |
| Timeline |
| Valvoline |
| Star Gas Partners |
Valvoline and Star Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valvoline and Star Gas
The main advantage of trading using opposite Valvoline and Star Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valvoline position performs unexpectedly, Star Gas 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 Star Gas will offset losses from the drop in Star Gas' long position.| Valvoline vs. Cosan SA ADR | Valvoline vs. Delek Energy | Valvoline vs. Crossamerica Partners LP | Valvoline vs. Par Pacific Holdings |
| Star Gas vs. Ultrapar Participacoes SA | Star Gas vs. Par Pacific Holdings | Star Gas vs. Delek Energy | Star Gas vs. Crossamerica Partners LP |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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