Correlation Between Valero Energy and Comcast Corp
Can any of the company-specific risk be diversified away by investing in both Valero Energy and Comcast 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 Valero Energy and Comcast Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valero Energy and Comcast Corp, you can compare the effects of market volatilities on Valero Energy and Comcast 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 Valero Energy with a short position of Comcast Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valero Energy and Comcast Corp.
Diversification Opportunities for Valero Energy and Comcast Corp
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Valero and Comcast is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy and Comcast Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast Corp 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 Comcast Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast Corp has no effect on the direction of Valero Energy i.e., Valero Energy and Comcast Corp go up and down completely randomly.
Pair Corralation between Valero Energy and Comcast Corp
Considering the 90-day investment horizon Valero Energy is expected to generate 1.17 times more return on investment than Comcast Corp. However, Valero Energy is 1.17 times more volatile than Comcast Corp. It trades about 0.09 of its potential returns per unit of risk. Comcast Corp is currently generating about 0.03 per unit of risk. If you would invest 11,405 in Valero Energy on January 20, 2024 and sell it today you would earn a total of 4,844 from holding Valero Energy or generate 42.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Valero Energy vs. Comcast Corp
Performance |
Timeline |
Valero Energy |
Comcast Corp |
Valero Energy and Comcast Corp Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Valero Energy and Comcast Corp
The main advantage of trading using opposite Valero Energy and Comcast Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valero Energy position performs unexpectedly, Comcast 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 Comcast Corp will offset losses from the drop in Comcast Corp's long position.Valero Energy vs. Delek Logistics Partners | Valero Energy vs. Crossamerica Partners LP | Valero Energy vs. Sunoco LP |
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Check out your portfolio center.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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