Correlation Between Freedom Bank and Via Renewables

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

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

Diversification Opportunities for Freedom Bank and Via Renewables

-0.58

Correlation Coefficient

Freedom Bank  Via Renewables

Excellent diversification

The 3 months correlation between Freedom and Via is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Freedom Bank 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 Freedom Bank of 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 Freedom Bank i.e., Freedom Bank and Via Renewables go up and down completely randomly.

Pair Corralation between Freedom Bank and Via Renewables

Given the investment horizon of 90 days Freedom Bank of is expected to under-perform the Via Renewables. In addition to that, Freedom Bank is 1.2 times more volatile than Via Renewables. It trades about -0.14 of its total potential returns per unit of risk. Via Renewables is currently generating about 0.14 per unit of volatility. If you would invest  2,286  in Via Renewables on December 27, 2024 and sell it today you would earn a total of  137.00  from holding Via Renewables or generate 5.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Freedom Bank of  vs.  Via Renewables

Freedom Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company 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 11 (%) 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 Freedom Bank and Via Renewables

The main advantage of trading using opposite Freedom Bank and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Freedom Bank 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 Freedom Bank of 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.