Correlation Between Valvoline and Crossamerica Partners

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

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

Diversification Opportunities for Valvoline and Crossamerica Partners

-0.32

Correlation Coefficient

Valvoline  Crossamerica Partners

Very good diversification

The 3 months correlation between Valvoline and Crossamerica is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Valvoline and Crossamerica Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crossamerica Partners and Valvoline 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 Valvoline are associated (or correlated) with Crossamerica Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crossamerica Partners has no effect on the direction of Valvoline i.e., Valvoline and Crossamerica Partners go up and down completely randomly.

Pair Corralation between Valvoline and Crossamerica Partners

Considering the 90-day investment horizon Valvoline is expected to under-perform the Crossamerica Partners. In addition to that, Valvoline is 1.56 times more volatile than Crossamerica Partners LP. It trades about -0.06 of its total potential returns per unit of risk. Crossamerica Partners LP is currently generating about 0.19 per unit of volatility. If you would invest  2,018  in Crossamerica Partners LP on November 28, 2024 and sell it today you would earn a total of  263.00  from holding Crossamerica Partners LP or generate 13.03% return on investment over 90 days.

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

Valvoline  vs.  Crossamerica Partners LP

Valvoline

Risk-Adjusted Performance

Very Weak

Over the last 90 days Valvoline has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Crossamerica Partners

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Crossamerica Partners LP are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Crossamerica Partners disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Valvoline and Crossamerica Partners

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

The idea behind Valvoline and Crossamerica Partners LP 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.