Correlation Between Energy Focu and Valvoline

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

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

Diversification Opportunities for Energy Focu and Valvoline

0.7

Correlation Coefficient

Energy Focu  Valvoline

Poor diversification

The 3 months correlation between Energy and Valvoline is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Energy Focu and Valvoline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valvoline and Energy Focu 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 Energy Focu are associated (or correlated) with Valvoline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valvoline has no effect on the direction of Energy Focu i.e., Energy Focu and Valvoline go up and down completely randomly.

Pair Corralation between Energy Focu and Valvoline

Given the investment horizon of 90 days Energy Focu is expected to generate 3.07 times more return on investment than Valvoline. However, Energy Focu is 3.07 times more volatile than Valvoline. It trades about 0.07 of its potential returns per unit of risk. Valvoline is currently generating about 0.02 per unit of risk. If you would invest  170.00  in Energy Focu on May 5, 2025 and sell it today you would earn a total of  31.00  from holding Energy Focu or generate 18.24% return on investment over 90 days.

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

Energy Focu  vs.  Valvoline

Energy Focu

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Focu are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Energy Focu demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Valvoline

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valvoline are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Valvoline is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Energy Focu and Valvoline

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

The idea behind Energy Focu and Valvoline 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.