Correlation Between Motorola Solutions and Via Renewables

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

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

Diversification Opportunities for Motorola Solutions and Via Renewables

0.8

Correlation Coefficient

Motorola Solutions  Via Renewables

Very poor diversification

The 3 months correlation between Motorola and Via is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Motorola Solutions and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Motorola Solutions 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 Motorola Solutions 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 Motorola Solutions i.e., Motorola Solutions and Via Renewables go up and down completely randomly.

Pair Corralation between Motorola Solutions and Via Renewables

Assuming the 90 days trading horizon Motorola Solutions is expected to under-perform the Via Renewables. In addition to that, Motorola Solutions is 1.73 times more volatile than Via Renewables. It trades about -0.07 of its total potential returns per unit of risk. Via Renewables is currently generating about 0.45 per unit of volatility. If you would invest  2,211  in Via Renewables on September 29, 2024 and sell it today you would earn a total of  147.00  from holding Via Renewables or generate 6.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.0%
Values	Daily Returns

Motorola Solutions  vs.  Via Renewables

Motorola Solutions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Motorola Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Motorola Solutions sustained solid returns over the last few months and may actually be approaching a breakup point.

Via Renewables

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Motorola Solutions and Via Renewables

The main advantage of trading using opposite Motorola Solutions and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorola Solutions 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 Motorola Solutions 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.