Correlation Between HF Sinclair and GE Vernova

Can any of the company-specific risk be diversified away by investing in both HF Sinclair and GE Vernova 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 HF Sinclair and GE Vernova into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HF Sinclair Corp and GE Vernova LLC, you can compare the effects of market volatilities on HF Sinclair and GE Vernova 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 HF Sinclair with a short position of GE Vernova. Check out your portfolio center. Please also check ongoing floating volatility patterns of HF Sinclair and GE Vernova.

Diversification Opportunities for HF Sinclair and GE Vernova

0.53

Correlation Coefficient

HF Sinclair  GE Vernova

Very weak diversification

The 3 months correlation between DINO and GEV is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and GE Vernova LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GE Vernova LLC and HF Sinclair 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 HF Sinclair Corp are associated (or correlated) with GE Vernova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GE Vernova LLC has no effect on the direction of HF Sinclair i.e., HF Sinclair and GE Vernova go up and down completely randomly.

Pair Corralation between HF Sinclair and GE Vernova

Given the investment horizon of 90 days HF Sinclair Corp is expected to under-perform the GE Vernova. But the stock apears to be less risky and, when comparing its historical volatility, HF Sinclair Corp is 1.82 times less risky than GE Vernova. The stock trades about -0.04 of its potential returns per unit of risk. The GE Vernova LLC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  32,809  in GE Vernova LLC on December 17, 2024 and sell it today you would lose (1,446) from holding GE Vernova LLC or give up 4.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

HF Sinclair Corp  vs.  GE Vernova LLC

HF Sinclair Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days HF Sinclair Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

GE Vernova LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days GE Vernova LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, GE Vernova is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with HF Sinclair and GE Vernova

The main advantage of trading using opposite HF Sinclair and GE Vernova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair position performs unexpectedly, GE Vernova 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 GE Vernova will offset losses from the drop in GE Vernova's long position.

The idea behind HF Sinclair Corp and GE Vernova LLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.