Correlation Between MGE Energy and Via Renewables

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

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

Diversification Opportunities for MGE Energy and Via Renewables

0.0

Correlation Coefficient

MGE Energy  Via Renewables

Pay attention - limited upside

The 3 months correlation between MGE and Via is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MGE Energy and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and MGE 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 MGE Energy 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 MGE Energy i.e., MGE Energy and Via Renewables go up and down completely randomly.

Pair Corralation between MGE Energy and Via Renewables

If you would invest (100.00) in Via Renewables on December 26, 2024 and sell it today you would earn a total of  100.00  from holding Via Renewables or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

MGE Energy  vs.  Via Renewables

MGE Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days MGE Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MGE Energy is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Via Renewables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Via Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Via Renewables is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MGE Energy and Via Renewables

The main advantage of trading using opposite MGE Energy and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGE Energy 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 MGE Energy 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.