Correlation Between Reservoir Media and Vistra Energy

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

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

Diversification Opportunities for Reservoir Media and Vistra Energy

0.38

Correlation Coefficient

Reservoir Media  Vistra Energy

Weak diversification

The 3 months correlation between Reservoir and Vistra is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Reservoir Media and Vistra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Energy Corp and Reservoir Media 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 Reservoir Media are associated (or correlated) with Vistra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Energy Corp has no effect on the direction of Reservoir Media i.e., Reservoir Media and Vistra Energy go up and down completely randomly.

Pair Corralation between Reservoir Media and Vistra Energy

Given the investment horizon of 90 days Reservoir Media is expected to under-perform the Vistra Energy. But the stock apears to be less risky and, when comparing its historical volatility, Reservoir Media is 3.25 times less risky than Vistra Energy. The stock trades about -0.17 of its potential returns per unit of risk. The Vistra Energy Corp is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  13,985  in Vistra Energy Corp on December 29, 2024 and sell it today you would lose (2,080) from holding Vistra Energy Corp or give up 14.87% of portfolio value over 90 days.

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

Reservoir Media  vs.  Vistra Energy Corp

Reservoir Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Reservoir Media has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Vistra Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vistra Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vistra Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Reservoir Media and Vistra Energy

The main advantage of trading using opposite Reservoir Media and Vistra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reservoir Media position performs unexpectedly, Vistra Energy 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 Vistra Energy will offset losses from the drop in Vistra Energy's long position.

The idea behind Reservoir Media and Vistra Energy Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.