Correlation Between GMxico Transportes and Valero Energy

Can any of the company-specific risk be diversified away by investing in both GMxico Transportes and Valero 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 GMxico Transportes and Valero Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GMxico Transportes SAB and Valero Energy, you can compare the effects of market volatilities on GMxico Transportes and Valero 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 GMxico Transportes with a short position of Valero Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of GMxico Transportes and Valero Energy.

Diversification Opportunities for GMxico Transportes and Valero Energy

0.02

Correlation Coefficient

GMxico Transportes  Valero Energy

Significant diversification

The 3 months correlation between GMxico and Valero is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding GMxico Transportes SAB and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy and GMxico Transportes 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 GMxico Transportes SAB are associated (or correlated) with Valero Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valero Energy has no effect on the direction of GMxico Transportes i.e., GMxico Transportes and Valero Energy go up and down completely randomly.

Pair Corralation between GMxico Transportes and Valero Energy

Assuming the 90 days trading horizon GMxico Transportes is expected to generate 1.21 times less return on investment than Valero Energy. But when comparing it to its historical volatility, GMxico Transportes SAB is 2.17 times less risky than Valero Energy. It trades about 0.12 of its potential returns per unit of risk. Valero Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  240,117  in Valero Energy on December 22, 2024 and sell it today you would earn a total of  22,783  from holding Valero Energy or generate 9.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

GMxico Transportes SAB  vs.  Valero Energy

GMxico Transportes SAB

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GMxico Transportes SAB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, GMxico Transportes may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Valero Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Valero Energy are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Valero Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with GMxico Transportes and Valero Energy

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

The idea behind GMxico Transportes SAB and Valero Energy 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.