Correlation Between Datang International and Vistra Energy
Can any of the company-specific risk be diversified away by investing in both Datang International and Vistra Energy 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 Datang International and Vistra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and Vistra Energy Corp, you can compare the effects of market volatilities on Datang International and Vistra Energy 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 Datang International with a short position of Vistra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and Vistra Energy.
Diversification Opportunities for Datang International and Vistra Energy
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Datang and Vistra is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and Vistra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Energy Corp and Datang International 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 Datang International Power are associated (or correlated) with Vistra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Energy Corp has no effect on the direction of Datang International i.e., Datang International and Vistra Energy go up and down completely randomly.
Pair Corralation between Datang International and Vistra Energy
If you would invest 7,987 in Vistra Energy Corp on September 11, 2024 and sell it today you would earn a total of 6,844 from holding Vistra Energy Corp or generate 85.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 1.59% |
Values | Daily Returns |
Datang International Power vs. Vistra Energy Corp
Performance |
Timeline |
Datang International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Vistra Energy Corp |
Datang International and Vistra Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Datang International and Vistra Energy
The main advantage of trading using opposite Datang International and Vistra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International position performs unexpectedly, Vistra Energy 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 Vistra Energy will offset losses from the drop in Vistra Energy's long position.Datang International vs. Maxim Power Corp | Datang International vs. Pampa Energia SA | Datang International vs. NRG Energy | Datang International vs. Vistra Energy Corp |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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