Correlation Between Vital Energy and WT Offshore

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

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

Diversification Opportunities for Vital Energy and WT Offshore

0.72

Correlation Coefficient

Vital Energy  WT Offshore

Poor diversification

The 3 months correlation between Vital and WTI is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy and WT Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WT Offshore and Vital Energy 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 Vital Energy are associated (or correlated) with WT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WT Offshore has no effect on the direction of Vital Energy i.e., Vital Energy and WT Offshore go up and down completely randomly.

Pair Corralation between Vital Energy and WT Offshore

Given the investment horizon of 90 days Vital Energy is expected to generate 1.23 times less return on investment than WT Offshore. In addition to that, Vital Energy is 1.02 times more volatile than WT Offshore. It trades about 0.44 of its total potential returns per unit of risk. WT Offshore is currently generating about 0.56 per unit of volatility. If you would invest  144.00  in WT Offshore on March 19, 2025 and sell it today you would earn a total of  75.00  from holding WT Offshore or generate 52.08% return on investment over 90 days.

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

Vital Energy  vs.  WT Offshore

Vital Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Vital Energy may actually be approaching a critical reversion point that can send shares even higher in July 2025.

WT Offshore

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WT Offshore are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, WT Offshore demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vital Energy and WT Offshore

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

The idea behind Vital Energy and WT Offshore 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.