Correlation Between Valero Energy and Ampol

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

By analyzing existing cross correlation between Valero Energy and Ampol Limited, you can compare the effects of market volatilities on Valero Energy and Ampol 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 Ampol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valero Energy and Ampol.

Diversification Opportunities for Valero Energy and Ampol

0.26

Correlation Coefficient

Valero Energy  Ampol

Modest diversification

The 3 months correlation between Valero and Ampol is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy and Ampol Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol Limited 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 are associated (or correlated) with Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol Limited has no effect on the direction of Valero Energy i.e., Valero Energy and Ampol go up and down completely randomly.

Pair Corralation between Valero Energy and Ampol

If you would invest  13,325  in Valero Energy on September 13, 2024 and sell it today you would earn a total of  4.00  from holding Valero Energy or generate 0.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Valero Energy  vs.  Ampol Limited

Valero Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valero Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Valero Energy is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Ampol Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampol Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Ampol is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Valero Energy and Ampol

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

The idea behind Valero Energy and Ampol Limited 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.