Correlation Between Via Renewables and Nextera Energy

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

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

Diversification Opportunities for Via Renewables and Nextera Energy

0.0

Correlation Coefficient

Via Renewables  Nextera Energy

Pay attention - limited upside

The 3 months correlation between Via and Nextera is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy and Via Renewables 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 Via Renewables are associated (or correlated) with Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of Via Renewables i.e., Via Renewables and Nextera Energy go up and down completely randomly.

Pair Corralation between Via Renewables and Nextera Energy

If you would invest (100.00) in Via Renewables on November 28, 2024 and sell it today you would earn a total of  100.00  from holding Via Renewables or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Via Renewables  vs.  Nextera Energy

Via Renewables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Via Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Via Renewables is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nextera Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nextera Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Nextera Energy is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Via Renewables and Nextera Energy

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

The idea behind Via Renewables and Nextera Energy 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 Directory module to find actively traded commodities issued by global exchanges.