Correlation Between Valero Energy and Enphase Energy,

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

By analyzing existing cross correlation between Valero Energy and Enphase Energy,, you can compare the effects of market volatilities on Valero Energy and Enphase Energy, 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 Enphase Energy,. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valero Energy and Enphase Energy,.

Diversification Opportunities for Valero Energy and Enphase Energy,

-0.36

Correlation Coefficient

Valero Energy  Enphase Energy,

Very good diversification

The 3 months correlation between Valero and Enphase is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Valero Energy and Enphase Energy, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enphase Energy, 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 Enphase Energy,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enphase Energy, has no effect on the direction of Valero Energy i.e., Valero Energy and Enphase Energy, go up and down completely randomly.

Pair Corralation between Valero Energy and Enphase Energy,

Assuming the 90 days trading horizon Valero Energy is expected to generate 0.46 times more return on investment than Enphase Energy,. However, Valero Energy is 2.17 times less risky than Enphase Energy,. It trades about -0.06 of its potential returns per unit of risk. Enphase Energy, is currently generating about -0.13 per unit of risk. If you would invest  260,866  in Valero Energy on September 26, 2024 and sell it today you would lose (22,453) from holding Valero Energy or give up 8.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Valero Energy  vs.  Enphase Energy,

Valero Energy

Risk-Adjusted Performance

0 of 100

Very Weak

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

Enphase Energy,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Enphase Energy, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Valero Energy and Enphase Energy,

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

The idea behind Valero Energy and Enphase Energy, 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.