Correlation Between PTL and Valero Energy

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

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

Diversification Opportunities for PTL and Valero Energy

-0.5

Correlation Coefficient

PTL  Valero Energy

Very good diversification

The 3 months correlation between PTL and Valero is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PTL LTD Ordinary and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy and PTL 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 PTL LTD Ordinary 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 PTL i.e., PTL and Valero Energy go up and down completely randomly.

Pair Corralation between PTL and Valero Energy

Given the investment horizon of 90 days PTL LTD Ordinary is expected to generate 10.1 times more return on investment than Valero Energy. However, PTL is 10.1 times more volatile than Valero Energy. It trades about 0.18 of its potential returns per unit of risk. Valero Energy is currently generating about -0.34 per unit of risk. If you would invest  762.00  in PTL LTD Ordinary on October 9, 2024 and sell it today you would earn a total of  255.00  from holding PTL LTD Ordinary or generate 33.46% return on investment over 90 days.

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

PTL LTD Ordinary  vs.  Valero Energy

PTL LTD Ordinary

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PTL LTD Ordinary are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, PTL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Valero Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PTL and Valero Energy

The main advantage of trading using opposite PTL and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTL 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 PTL LTD Ordinary 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.