Correlation Between Veren and Vitesse Energy

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

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

Diversification Opportunities for Veren and Vitesse Energy

-0.77

Correlation Coefficient

Veren  Vitesse Energy

Pay attention - limited upside

The 3 months correlation between Veren and Vitesse is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Veren Inc and Vitesse Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vitesse Energy and Veren 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 Veren Inc are associated (or correlated) with Vitesse Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vitesse Energy has no effect on the direction of Veren i.e., Veren and Vitesse Energy go up and down completely randomly.

Pair Corralation between Veren and Vitesse Energy

Considering the 90-day investment horizon Veren Inc is expected to under-perform the Vitesse Energy. In addition to that, Veren is 2.11 times more volatile than Vitesse Energy. It trades about -0.18 of its total potential returns per unit of risk. Vitesse Energy is currently generating about 0.15 per unit of volatility. If you would invest  2,532  in Vitesse Energy on September 13, 2024 and sell it today you would earn a total of  214.00  from holding Vitesse Energy or generate 8.45% return on investment over 90 days.

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

Veren Inc  vs.  Vitesse Energy

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 fragile 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.

Vitesse Energy

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vitesse Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Vitesse Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veren and Vitesse Energy

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

The idea behind Veren Inc and Vitesse 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.