Correlation Between Dillards Capital and Via Renewables

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

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

Diversification Opportunities for Dillards Capital and Via Renewables

0.44

Correlation Coefficient

Dillards Capital  Via Renewables

Very weak diversification

The 3 months correlation between Dillards and Via is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dillards Capital Trust and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Dillards Capital 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 Dillards Capital Trust 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 Dillards Capital i.e., Dillards Capital and Via Renewables go up and down completely randomly.

Pair Corralation between Dillards Capital and Via Renewables

Considering the 90-day investment horizon Dillards Capital is expected to generate 5.28 times less return on investment than Via Renewables. But when comparing it to its historical volatility, Dillards Capital Trust is 5.15 times less risky than Via Renewables. It trades about 0.06 of its potential returns per unit of risk. Via Renewables is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,692  in Via Renewables on September 23, 2024 and sell it today you would earn a total of  643.00  from holding Via Renewables or generate 38.0% return on investment over 90 days.

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

Dillards Capital Trust  vs.  Via Renewables

Dillards Capital Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Dillards Capital is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Via Renewables

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dillards Capital and Via Renewables

The main advantage of trading using opposite Dillards Capital and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dillards Capital 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 Dillards Capital Trust 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.