Correlation Between Index Oil and Vital Energy

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

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

Diversification Opportunities for Index Oil and Vital Energy

0.0

Correlation Coefficient

Index Oil  Vital Energy

Pay attention - limited upside

The 3 months correlation between Index and Vital is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Index Oil and and Vital Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital Energy and Index Oil 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 Index Oil and are associated (or correlated) with Vital Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Energy has no effect on the direction of Index Oil i.e., Index Oil and Vital Energy go up and down completely randomly.

Pair Corralation between Index Oil and Vital Energy

If you would invest  0.07  in Index Oil and on December 19, 2024 and sell it today you would lose  0.00  from holding Index Oil and or give up 0.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Index Oil and  vs.  Vital Energy

Index Oil

Risk-Adjusted Performance

Very Weak

Over the last 90 days Index Oil and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Index Oil is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Vital Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vital Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Index Oil and Vital Energy

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

The idea behind Index Oil and and Vital 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.