Correlation Between Renewal Fuels and Via Renewables

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

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

Diversification Opportunities for Renewal Fuels and Via Renewables

-0.83

Correlation Coefficient

Renewal Fuels  Via Renewables

Pay attention - limited upside

The 3 months correlation between Renewal and Via is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Renewal Fuels and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Renewal Fuels 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 Renewal Fuels 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 Renewal Fuels i.e., Renewal Fuels and Via Renewables go up and down completely randomly.

Pair Corralation between Renewal Fuels and Via Renewables

If you would invest  2,269  in Via Renewables on October 20, 2024 and sell it today you would earn a total of  46.00  from holding Via Renewables or generate 2.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Renewal Fuels  vs.  Via Renewables

Renewal Fuels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Renewal Fuels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Via Renewables

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 22 (%) 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 Renewal Fuels and Via Renewables

The main advantage of trading using opposite Renewal Fuels and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renewal Fuels 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 Renewal Fuels 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.