Correlation Between Vermilion Energy and PEDEVCO Corp

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

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

Diversification Opportunities for Vermilion Energy and PEDEVCO Corp

0.12

Correlation Coefficient

Vermilion Energy  PEDEVCO Corp

Average diversification

The 3 months correlation between Vermilion and PEDEVCO is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vermilion Energy and PEDEVCO Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PEDEVCO Corp and Vermilion 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 Vermilion Energy are associated (or correlated) with PEDEVCO Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PEDEVCO Corp has no effect on the direction of Vermilion Energy i.e., Vermilion Energy and PEDEVCO Corp go up and down completely randomly.

Pair Corralation between Vermilion Energy and PEDEVCO Corp

Considering the 90-day investment horizon Vermilion Energy is expected to generate 0.69 times more return on investment than PEDEVCO Corp. However, Vermilion Energy is 1.45 times less risky than PEDEVCO Corp. It trades about 0.06 of its potential returns per unit of risk. PEDEVCO Corp is currently generating about 0.02 per unit of risk. If you would invest  956.00  in Vermilion Energy on August 31, 2024 and sell it today you would earn a total of  64.00  from holding Vermilion Energy or generate 6.69% return on investment over 90 days.

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

Vermilion Energy  vs.  PEDEVCO Corp

Vermilion Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vermilion Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Vermilion Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

PEDEVCO Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PEDEVCO Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, PEDEVCO Corp is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vermilion Energy and PEDEVCO Corp

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

The idea behind Vermilion Energy and PEDEVCO 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.