Correlation Between Vistra Corp and Stag Industrial

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

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

Diversification Opportunities for Vistra Corp and Stag Industrial

-0.17

Correlation Coefficient

Vistra Corp  Stag Industrial

Good diversification

The 3 months correlation between Vistra and Stag is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Corp and Stag Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stag Industrial and Vistra Corp 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 Vistra Corp are associated (or correlated) with Stag Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stag Industrial has no effect on the direction of Vistra Corp i.e., Vistra Corp and Stag Industrial go up and down completely randomly.

Pair Corralation between Vistra Corp and Stag Industrial

Assuming the 90 days horizon Vistra Corp is expected to generate 2.96 times more return on investment than Stag Industrial. However, Vistra Corp is 2.96 times more volatile than Stag Industrial. It trades about 0.23 of its potential returns per unit of risk. Stag Industrial is currently generating about -0.31 per unit of risk. If you would invest  13,247  in Vistra Corp on October 11, 2024 and sell it today you would earn a total of  2,038  from holding Vistra Corp or generate 15.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Vistra Corp  vs.  Stag Industrial

Vistra Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vistra Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Vistra Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Stag Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stag Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Stag Industrial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vistra Corp and Stag Industrial

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

The idea behind Vistra Corp and Stag Industrial 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.