Correlation Between Europacific Growth and Via Renewables

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

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

Diversification Opportunities for Europacific Growth and Via Renewables

0.25

Correlation Coefficient

Europacific Growth  Via Renewables

Modest diversification

The 3 months correlation between Europacific and Via is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Europacific Growth Fund and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Europacific Growth 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 Europacific Growth Fund are associated (or correlated) with Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Europacific Growth i.e., Europacific Growth and Via Renewables go up and down completely randomly.

Pair Corralation between Europacific Growth and Via Renewables

Assuming the 90 days horizon Europacific Growth is expected to generate 1.05 times less return on investment than Via Renewables. In addition to that, Europacific Growth is 1.38 times more volatile than Via Renewables. It trades about 0.09 of its total potential returns per unit of risk. Via Renewables is currently generating about 0.13 per unit of volatility. If you would invest  2,285  in Via Renewables on December 22, 2024 and sell it today you would earn a total of  130.00  from holding Via Renewables or generate 5.69% return on investment over 90 days.

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

Europacific Growth Fund  vs.  Via Renewables

Europacific Growth

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Europacific Growth Fund are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Europacific Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Via Renewables

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Via Renewables is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Europacific Growth and Via Renewables

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

The idea behind Europacific Growth Fund and Via Renewables 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.