Correlation Between Eversource Energy and Vast Renewables

Can any of the company-specific risk be diversified away by investing in both Eversource 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 Eversource 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 Eversource Energy and Vast Renewables Limited, you can compare the effects of market volatilities on Eversource 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 Eversource Energy with a short position of Vast Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eversource Energy and Vast Renewables.

Diversification Opportunities for Eversource Energy and Vast Renewables

-0.01

Correlation Coefficient

Eversource Energy  Vast Renewables

Good diversification

The 3 months correlation between Eversource and Vast is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Eversource 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 Eversource 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 Eversource 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 Eversource Energy i.e., Eversource Energy and Vast Renewables go up and down completely randomly.

Pair Corralation between Eversource Energy and Vast Renewables

Allowing for the 90-day total investment horizon Eversource Energy is expected to generate 3.18 times less return on investment than Vast Renewables. But when comparing it to its historical volatility, Eversource Energy is 10.09 times less risky than Vast Renewables. It trades about 0.02 of its potential returns per unit of risk. Vast Renewables Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,112  in Vast Renewables Limited on December 2, 2024 and sell it today you would lose (1,057) from holding Vast Renewables Limited or give up 95.05% of portfolio value over 90 days.

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

Eversource Energy  vs.  Vast Renewables Limited

Eversource Energy

Risk-Adjusted Performance

Very Weak

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

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 unfluctuating 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 Eversource Energy and Vast Renewables

The main advantage of trading using opposite Eversource Energy and Vast Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eversource 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 Eversource 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.