Correlation Between Vaalco Energy and Veren

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

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

Diversification Opportunities for Vaalco Energy and Veren

0.86

Correlation Coefficient

Vaalco Energy  Veren

Very poor diversification

The 3 months correlation between Vaalco and Veren is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vaalco Energy and Veren Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veren Inc and Vaalco 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 Vaalco Energy are associated (or correlated) with Veren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veren Inc has no effect on the direction of Vaalco Energy i.e., Vaalco Energy and Veren go up and down completely randomly.

Pair Corralation between Vaalco Energy and Veren

Considering the 90-day investment horizon Vaalco Energy is expected to generate 0.85 times more return on investment than Veren. However, Vaalco Energy is 1.18 times less risky than Veren. It trades about -0.08 of its potential returns per unit of risk. Veren Inc is currently generating about -0.13 per unit of risk. If you would invest  565.00  in Vaalco Energy on September 14, 2024 and sell it today you would lose (71.00) from holding Vaalco Energy or give up 12.57% of portfolio value over 90 days.

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

Vaalco Energy  vs.  Veren Inc

Vaalco Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaalco Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Veren Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veren Inc 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 basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vaalco Energy and Veren

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

The idea behind Vaalco Energy and Veren Inc 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.