Correlation Between SECURITAS and Valero Energy

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

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

Diversification Opportunities for SECURITAS and Valero Energy

0.08

Correlation Coefficient

SECURITAS  Valero Energy

Significant diversification

The 3 months correlation between SECURITAS and Valero is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SECURITAS B and Valero Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy Corp and SECURITAS 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 SECURITAS B 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 Corp has no effect on the direction of SECURITAS i.e., SECURITAS and Valero Energy go up and down completely randomly.

Pair Corralation between SECURITAS and Valero Energy

Assuming the 90 days trading horizon SECURITAS B is expected to generate 2.08 times more return on investment than Valero Energy. However, SECURITAS is 2.08 times more volatile than Valero Energy Corp. It trades about 0.21 of its potential returns per unit of risk. Valero Energy Corp is currently generating about -0.09 per unit of risk. If you would invest  915.00  in SECURITAS B on October 7, 2024 and sell it today you would earn a total of  279.00  from holding SECURITAS B or generate 30.49% return on investment over 90 days.

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

SECURITAS B   vs.  Valero Energy Corp

SECURITAS B

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SECURITAS B are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SECURITAS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Valero Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valero Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with SECURITAS and Valero Energy

The main advantage of trading using opposite SECURITAS and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SECURITAS 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 SECURITAS B and Valero Energy Corp 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 Managers module to screen money managers from public funds and ETFs managed around the world.