Correlation Between Sabine Royalty and Via Renewables

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

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

Diversification Opportunities for Sabine Royalty and Via Renewables

0.71

Correlation Coefficient

Sabine Royalty  Via Renewables

Poor diversification

The 3 months correlation between Sabine and Via is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Sabine Royalty Trust and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Sabine Royalty 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 Sabine Royalty Trust 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 Sabine Royalty i.e., Sabine Royalty and Via Renewables go up and down completely randomly.

Pair Corralation between Sabine Royalty and Via Renewables

Considering the 90-day investment horizon Sabine Royalty is expected to generate 7.83 times less return on investment than Via Renewables. In addition to that, Sabine Royalty is 2.87 times more volatile than Via Renewables. It trades about 0.02 of its total potential returns per unit of risk. Via Renewables is currently generating about 0.49 per unit of volatility. If you would invest  2,148  in Via Renewables on October 5, 2024 and sell it today you would earn a total of  155.00  from holding Via Renewables or generate 7.22% return on investment over 90 days.

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

Sabine Royalty Trust  vs.  Via Renewables

Sabine Royalty Trust

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sabine Royalty Trust are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental drivers, Sabine Royalty may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Via Renewables

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 21 (%) 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 Sabine Royalty and Via Renewables

The main advantage of trading using opposite Sabine Royalty and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabine Royalty 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 Sabine Royalty Trust 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.