Correlation Between Via Renewables and Dillards Capital

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

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

Diversification Opportunities for Via Renewables and Dillards Capital

0.44

Correlation Coefficient

Via Renewables  Dillards Capital

Very weak diversification

The 3 months correlation between Via and Dillards is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Dillards Capital Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dillards Capital Trust 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 Dillards Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dillards Capital Trust has no effect on the direction of Via Renewables i.e., Via Renewables and Dillards Capital go up and down completely randomly.

Pair Corralation between Via Renewables and Dillards Capital

Assuming the 90 days horizon Via Renewables is expected to generate 5.15 times more return on investment than Dillards Capital. However, Via Renewables is 5.15 times more volatile than Dillards Capital Trust. It trades about 0.06 of its potential returns per unit of risk. Dillards Capital Trust is currently generating about 0.06 per unit of risk. If you would invest  1,692  in Via Renewables on September 23, 2024 and sell it today you would earn a total of  643.00  from holding Via Renewables or generate 38.0% return on investment over 90 days.

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

Via Renewables  vs.  Dillards Capital Trust

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.

Dillards Capital Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dillards Capital Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Dillards Capital 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 Via Renewables and Dillards Capital

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

The idea behind Via Renewables and Dillards Capital Trust 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.