Correlation Between Valeura Energy and Spartan Delta

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

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

Diversification Opportunities for Valeura Energy and Spartan Delta

0.27

Correlation Coefficient

Valeura Energy  Spartan Delta

Modest diversification

The 3 months correlation between Valeura and Spartan is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Valeura Energy and Spartan Delta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spartan Delta Corp and Valeura 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 Valeura Energy are associated (or correlated) with Spartan Delta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spartan Delta Corp has no effect on the direction of Valeura Energy i.e., Valeura Energy and Spartan Delta go up and down completely randomly.

Pair Corralation between Valeura Energy and Spartan Delta

Assuming the 90 days horizon Valeura Energy is expected to generate 1.09 times more return on investment than Spartan Delta. However, Valeura Energy is 1.09 times more volatile than Spartan Delta Corp. It trades about 0.12 of its potential returns per unit of risk. Spartan Delta Corp is currently generating about 0.01 per unit of risk. If you would invest  476.00  in Valeura Energy on December 30, 2024 and sell it today you would earn a total of  109.00  from holding Valeura Energy or generate 22.9% return on investment over 90 days.

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

Valeura Energy  vs.  Spartan Delta Corp

Valeura Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valeura Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Valeura Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Spartan Delta Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Spartan Delta Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Spartan Delta is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Valeura Energy and Spartan Delta

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

The idea behind Valeura Energy and Spartan Delta 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.