Correlation Between YPF Sociedad and NuVista Energy

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

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

Diversification Opportunities for YPF Sociedad and NuVista Energy

0.63

Correlation Coefficient

YPF Sociedad  NuVista Energy

Poor diversification

The 3 months correlation between YPF and NuVista is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding YPF Sociedad Anonima and NuVista Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NuVista Energy and YPF Sociedad 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 YPF Sociedad Anonima are associated (or correlated) with NuVista Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NuVista Energy has no effect on the direction of YPF Sociedad i.e., YPF Sociedad and NuVista Energy go up and down completely randomly.

Pair Corralation between YPF Sociedad and NuVista Energy

Considering the 90-day investment horizon YPF Sociedad Anonima is expected to generate 1.12 times more return on investment than NuVista Energy. However, YPF Sociedad is 1.12 times more volatile than NuVista Energy. It trades about 0.35 of its potential returns per unit of risk. NuVista Energy is currently generating about 0.06 per unit of risk. If you would invest  2,325  in YPF Sociedad Anonima on August 31, 2024 and sell it today you would earn a total of  1,646  from holding YPF Sociedad Anonima or generate 70.8% return on investment over 90 days.

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

YPF Sociedad Anonima  vs.  NuVista Energy

YPF Sociedad Anonima

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in YPF Sociedad Anonima are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish basic indicators, YPF Sociedad reported solid returns over the last few months and may actually be approaching a breakup point.

NuVista Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NuVista Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, NuVista Energy may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with YPF Sociedad and NuVista Energy

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

The idea behind YPF Sociedad Anonima and NuVista 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.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.