Correlation Between Vital Energy and Calumet Specialty

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

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

Diversification Opportunities for Vital Energy and Calumet Specialty

0.71

Correlation Coefficient

Vital Energy  Calumet Specialty

Poor diversification

The 3 months correlation between Vital and Calumet is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy and Calumet Specialty Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calumet Specialty and Vital 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 Vital Energy are associated (or correlated) with Calumet Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calumet Specialty has no effect on the direction of Vital Energy i.e., Vital Energy and Calumet Specialty go up and down completely randomly.

Pair Corralation between Vital Energy and Calumet Specialty

Given the investment horizon of 90 days Vital Energy is expected to generate 0.76 times more return on investment than Calumet Specialty. However, Vital Energy is 1.32 times less risky than Calumet Specialty. It trades about -0.11 of its potential returns per unit of risk. Calumet Specialty Products is currently generating about -0.16 per unit of risk. If you would invest  2,942  in Vital Energy on December 26, 2024 and sell it today you would lose (708.00) from holding Vital Energy or give up 24.07% of portfolio value over 90 days.

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

Vital Energy  vs.  Calumet Specialty Products

Vital Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vital Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Calumet Specialty

Risk-Adjusted Performance

Very Weak

Over the last 90 days Calumet Specialty Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's primary indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Vital Energy and Calumet Specialty

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

The idea behind Vital Energy and Calumet Specialty Products 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.