Correlation Between Valero Energy and VIB Vermgen

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

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

Diversification Opportunities for Valero Energy and VIB Vermgen

-0.32

Correlation Coefficient

Valero Energy  VIB Vermgen

Very good diversification

The 3 months correlation between Valero and VIB is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy Corp and VIB Vermgen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIB Vermgen AG and Valero Energy 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 Valero Energy Corp are associated (or correlated) with VIB Vermgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIB Vermgen AG has no effect on the direction of Valero Energy i.e., Valero Energy and VIB Vermgen go up and down completely randomly.

Pair Corralation between Valero Energy and VIB Vermgen

Assuming the 90 days trading horizon Valero Energy Corp is expected to generate 1.35 times more return on investment than VIB Vermgen. However, Valero Energy is 1.35 times more volatile than VIB Vermgen AG. It trades about 0.09 of its potential returns per unit of risk. VIB Vermgen AG is currently generating about -0.04 per unit of risk. If you would invest  11,210  in Valero Energy Corp on December 23, 2024 and sell it today you would earn a total of  1,196  from holding Valero Energy Corp or generate 10.67% return on investment over 90 days.

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

Valero Energy Corp  vs.  VIB Vermgen AG

Valero Energy Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valero Energy Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Valero Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

VIB Vermgen AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days VIB Vermgen AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, VIB Vermgen is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Valero Energy and VIB Vermgen

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

The idea behind Valero Energy Corp and VIB Vermgen AG 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.