Correlation Between Via Renewables and BP PLC

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

By analyzing existing cross correlation between Via Renewables and BP PLC ADR, you can compare the effects of market volatilities on Via Renewables and BP PLC 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 BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and BP PLC.

Diversification Opportunities for Via Renewables and BP PLC

-0.62

Correlation Coefficient

Via Renewables  BP PLC

Excellent diversification

The 3 months correlation between Via and BP PLC is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and BP PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC ADR 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 BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC ADR has no effect on the direction of Via Renewables i.e., Via Renewables and BP PLC go up and down completely randomly.

Pair Corralation between Via Renewables and BP PLC

Assuming the 90 days horizon Via Renewables is expected to generate 2.04 times more return on investment than BP PLC. However, Via Renewables is 2.04 times more volatile than BP PLC ADR. It trades about 0.03 of its potential returns per unit of risk. BP PLC ADR is currently generating about -0.01 per unit of risk. If you would invest  1,742  in Via Renewables on September 20, 2024 and sell it today you would earn a total of  553.00  from holding Via Renewables or generate 31.75% return on investment over 90 days.

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

Via Renewables  vs.  BP PLC ADR

Via Renewables

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BP PLC ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP PLC ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest inconsistent performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Via Renewables and BP PLC

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

The idea behind Via Renewables and BP PLC ADR 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.