Correlation Between Valaris and California Resources

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

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

Diversification Opportunities for Valaris and California Resources

0.1

Correlation Coefficient

Valaris  California Resources

Average diversification

The 3 months correlation between Valaris and California is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Valaris and California Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Resources Corp and Valaris 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 Valaris are associated (or correlated) with California Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Resources Corp has no effect on the direction of Valaris i.e., Valaris and California Resources go up and down completely randomly.

Pair Corralation between Valaris and California Resources

Considering the 90-day investment horizon Valaris is expected to generate 1.78 times more return on investment than California Resources. However, Valaris is 1.78 times more volatile than California Resources Corp. It trades about 0.01 of its potential returns per unit of risk. California Resources Corp is currently generating about -0.13 per unit of risk. If you would invest  5,226  in Valaris on October 7, 2025 and sell it today you would lose (15.00) from holding Valaris or give up 0.29% of portfolio value over 90 days.

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

Valaris  vs.  California Resources Corp

Valaris

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Valaris are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Valaris is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

California Resources Corp

Risk-Adjusted Performance

Weakest

Over the last 90 days California Resources Corp 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 rather sound which may send shares a bit higher in February 2026. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Valaris and California Resources

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

The idea behind Valaris and California Resources Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.