Correlation Between Stag Industrial and Vistra Corp

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

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

Diversification Opportunities for Stag Industrial and Vistra Corp

-0.17

Correlation Coefficient

Stag Industrial  Vistra Corp

Good diversification

The 3 months correlation between Stag and Vistra is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Stag Industrial and Vistra Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Corp and Stag Industrial 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 Stag Industrial are associated (or correlated) with Vistra Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Corp has no effect on the direction of Stag Industrial i.e., Stag Industrial and Vistra Corp go up and down completely randomly.

Pair Corralation between Stag Industrial and Vistra Corp

Assuming the 90 days trading horizon Stag Industrial is expected to under-perform the Vistra Corp. But the stock apears to be less risky and, when comparing its historical volatility, Stag Industrial is 3.09 times less risky than Vistra Corp. The stock trades about -0.3 of its potential returns per unit of risk. The Vistra Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  13,247  in Vistra Corp on October 11, 2024 and sell it today you would earn a total of  2,673  from holding Vistra Corp or generate 20.18% return on investment over 90 days.

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

Stag Industrial  vs.  Vistra Corp

Stag Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vistra Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vistra Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Vistra Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stag Industrial and Vistra Corp

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

The idea behind Stag Industrial and Vistra 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.