Correlation Between Dominion Energy and Vast Renewables

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

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

Diversification Opportunities for Dominion Energy and Vast Renewables

-0.68

Correlation Coefficient

Dominion Energy  Vast Renewables

Excellent diversification

The 3 months correlation between Dominion and Vast is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and Vast Renewables Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vast Renewables and Dominion 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 Dominion Energy are associated (or correlated) with Vast Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vast Renewables has no effect on the direction of Dominion Energy i.e., Dominion Energy and Vast Renewables go up and down completely randomly.

Pair Corralation between Dominion Energy and Vast Renewables

Taking into account the 90-day investment horizon Dominion Energy is expected to generate 0.23 times more return on investment than Vast Renewables. However, Dominion Energy is 4.33 times less risky than Vast Renewables. It trades about 0.03 of its potential returns per unit of risk. Vast Renewables Limited is currently generating about -0.24 per unit of risk. If you would invest  5,313  in Dominion Energy on December 24, 2024 and sell it today you would earn a total of  120.00  from holding Dominion Energy or generate 2.26% return on investment over 90 days.

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

Dominion Energy  vs.  Vast Renewables Limited

Dominion Energy

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dominion Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Dominion Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Vast Renewables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vast Renewables Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Dominion Energy and Vast Renewables

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

The idea behind Dominion Energy and Vast Renewables Limited 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..