Correlation Between Vulcan Energy and COG Financial

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

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

Diversification Opportunities for Vulcan Energy and COG Financial

-0.67

Correlation Coefficient

Vulcan Energy  COG Financial

Excellent diversification

The 3 months correlation between Vulcan and COG is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Vulcan Energy Resources and COG Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COG Financial Services and Vulcan 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 Vulcan Energy Resources are associated (or correlated) with COG Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COG Financial Services has no effect on the direction of Vulcan Energy i.e., Vulcan Energy and COG Financial go up and down completely randomly.

Pair Corralation between Vulcan Energy and COG Financial

Assuming the 90 days trading horizon Vulcan Energy Resources is expected to under-perform the COG Financial. In addition to that, Vulcan Energy is 2.26 times more volatile than COG Financial Services. It trades about -0.04 of its total potential returns per unit of risk. COG Financial Services is currently generating about -0.09 per unit of volatility. If you would invest  101.00  in COG Financial Services on December 10, 2024 and sell it today you would lose (5.00) from holding COG Financial Services or give up 4.95% of portfolio value over 90 days.

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

Vulcan Energy Resources  vs.  COG Financial Services

Vulcan Energy Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vulcan Energy Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential 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.

COG Financial Services

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COG Financial Services are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, COG Financial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vulcan Energy and COG Financial

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

The idea behind Vulcan Energy Resources and COG Financial Services 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.