Correlation Between VIB Vermgen and Valero Energy

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

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

Diversification Opportunities for VIB Vermgen and Valero Energy

-0.39

Correlation Coefficient

VIB Vermgen  Valero Energy

Very good diversification

The 3 months correlation between VIB and Valero is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding VIB Vermgen AG and Valero Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valero Energy and VIB Vermgen 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 VIB Vermgen AG 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 VIB Vermgen i.e., VIB Vermgen and Valero Energy go up and down completely randomly.

Pair Corralation between VIB Vermgen and Valero Energy

Assuming the 90 days trading horizon VIB Vermgen AG is expected to under-perform the Valero Energy. But the stock apears to be less risky and, when comparing its historical volatility, VIB Vermgen AG is 1.45 times less risky than Valero Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Valero Energy is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,082  in Valero Energy on December 22, 2024 and sell it today you would earn a total of  1,132  from holding Valero Energy or generate 10.21% return on investment over 90 days.

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

VIB Vermgen AG  vs.  Valero Energy

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 current stock price uproar, may contribute to short-horizon losses for the private investors.

Valero Energy

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Valero Energy are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Valero Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with VIB Vermgen and Valero Energy

The main advantage of trading using opposite VIB Vermgen and Valero Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIB Vermgen 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 VIB Vermgen AG 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.