Correlation Between Vivakor and Vaalco Energy

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

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

Diversification Opportunities for Vivakor and Vaalco Energy

0.09

Correlation Coefficient

Vivakor  Vaalco Energy

Significant diversification

The 3 months correlation between Vivakor and Vaalco is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vivakor and Vaalco Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaalco Energy and Vivakor 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 Vivakor are associated (or correlated) with Vaalco Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaalco Energy has no effect on the direction of Vivakor i.e., Vivakor and Vaalco Energy go up and down completely randomly.

Pair Corralation between Vivakor and Vaalco Energy

Given the investment horizon of 90 days Vivakor is expected to generate 2.09 times more return on investment than Vaalco Energy. However, Vivakor is 2.09 times more volatile than Vaalco Energy. It trades about 0.11 of its potential returns per unit of risk. Vaalco Energy is currently generating about 0.19 per unit of risk. If you would invest  88.00  in Vivakor on February 18, 2024 and sell it today you would earn a total of  40.00  from holding Vivakor or generate 45.45% return on investment over 90 days.

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

Vivakor  vs.  Vaalco Energy

Vivakor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vivakor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Vivakor disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vaalco Energy

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vaalco Energy are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating technical and fundamental indicators, Vaalco Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vivakor and Vaalco Energy

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

The idea behind Vivakor and Vaalco 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.