Correlation Between Vertex Energy and Procter Gamble

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

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

Diversification Opportunities for Vertex Energy and Procter Gamble

-0.26

Correlation Coefficient

Vertex Energy  Procter Gamble

Very good diversification

The 3 months correlation between Vertex and Procter is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Vertex Energy and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble and Vertex 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 Vertex Energy are associated (or correlated) with Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Vertex Energy i.e., Vertex Energy and Procter Gamble go up and down completely randomly.

Pair Corralation between Vertex Energy and Procter Gamble

Given the investment horizon of 90 days Vertex Energy is expected to under-perform the Procter Gamble. In addition to that, Vertex Energy is 5.37 times more volatile than Procter Gamble. It trades about -0.04 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.02 per unit of volatility. If you would invest  14,819  in Procter Gamble on January 26, 2024 and sell it today you would earn a total of  1,441  from holding Procter Gamble or generate 9.72% return on investment over 90 days.

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

Vertex Energy  vs.  Procter Gamble

Vertex Energy

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vertex Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Vertex Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Procter Gamble

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Procter Gamble are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Procter Gamble is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vertex Energy and Procter Gamble

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

The idea behind Vertex Energy and Procter Gamble 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.