Correlation Between Vital Energy and PetroTal Corp

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

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

Diversification Opportunities for Vital Energy and PetroTal Corp

0.14

Correlation Coefficient

Vital Energy  PetroTal Corp

Average diversification

The 3 months correlation between Vital and PetroTal is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy and PetroTal Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroTal Corp 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 PetroTal Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroTal Corp has no effect on the direction of Vital Energy i.e., Vital Energy and PetroTal Corp go up and down completely randomly.

Pair Corralation between Vital Energy and PetroTal Corp

Given the investment horizon of 90 days Vital Energy is expected to under-perform the PetroTal Corp. In addition to that, Vital Energy is 1.42 times more volatile than PetroTal Corp. It trades about -0.12 of its total potential returns per unit of risk. PetroTal Corp is currently generating about 0.15 per unit of volatility. If you would invest  39.00  in PetroTal Corp on December 29, 2024 and sell it today you would earn a total of  9.00  from holding PetroTal Corp or generate 23.08% return on investment over 90 days.

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

Vital Energy  vs.  PetroTal Corp

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.

PetroTal Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PetroTal Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting essential indicators, PetroTal Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vital Energy and PetroTal Corp

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

The idea behind Vital Energy and PetroTal 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.