Correlation Between Option Care and Via Renewables

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

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

Diversification Opportunities for Option Care and Via Renewables

0.74

Correlation Coefficient

Option Care  Via Renewables

Poor diversification

The 3 months correlation between Option and Via is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Option Care Health and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Option Care 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 Option Care Health 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 Option Care i.e., Option Care and Via Renewables go up and down completely randomly.

Pair Corralation between Option Care and Via Renewables

Given the investment horizon of 90 days Option Care Health is expected to generate 3.49 times more return on investment than Via Renewables. However, Option Care is 3.49 times more volatile than Via Renewables. It trades about 0.31 of its potential returns per unit of risk. Via Renewables is currently generating about 0.14 per unit of risk. If you would invest  2,285  in Option Care Health on December 27, 2024 and sell it today you would earn a total of  1,235  from holding Option Care Health or generate 54.05% return on investment over 90 days.

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

Option Care Health  vs.  Via Renewables

Option Care Health

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Option Care Health are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Option Care demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Option Care and Via Renewables

The main advantage of trading using opposite Option Care and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Option Care 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 Option Care Health 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.