Correlation Between Chewy and Vertex Energy

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Can any of the company-specific risk be diversified away by investing in both Chewy and Vertex 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 Chewy and Vertex Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chewy Inc and Vertex Energy, you can compare the effects of market volatilities on Chewy and Vertex 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 Chewy with a short position of Vertex Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chewy and Vertex Energy.

Diversification Opportunities for Chewy and Vertex Energy

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Chewy and Vertex is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chewy Inc and Vertex Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vertex Energy and Chewy 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 Chewy Inc are associated (or correlated) with Vertex Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vertex Energy has no effect on the direction of Chewy i.e., Chewy and Vertex Energy go up and down completely randomly.

Pair Corralation between Chewy and Vertex Energy

If you would invest  4,298  in Chewy Inc on May 19, 2022 and sell it today you would earn a total of  527.00  from holding Chewy Inc or generate 12.26% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Chewy Inc  vs.  Vertex Energy

 Performance (%) 
       Timeline  
Chewy Inc 
Chewy Performance
17 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Chewy Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Chewy showed solid returns over the last few months and may actually be approaching a breakup point.

Chewy Price Channel

Vertex Energy 
Vertex Performance
0 of 100
Over the last 90 days Vertex Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Vertex Energy is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Chewy and Vertex Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Chewy and Vertex Energy

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

Vertex Energy

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The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Vertex Energy as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Vertex Energy's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Vertex Energy's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Vertex Energy.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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