Correlation Between Via Renewables and AB Low

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

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

Diversification Opportunities for Via Renewables and AB Low

0.42

Correlation Coefficient

Via Renewables  AB Low

Very weak diversification

The 3 months correlation between Via and LOWV is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and AB Low Volatility in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Low Volatility 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 AB Low. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Low Volatility has no effect on the direction of Via Renewables i.e., Via Renewables and AB Low go up and down completely randomly.

Pair Corralation between Via Renewables and AB Low

Assuming the 90 days horizon Via Renewables is expected to generate 1.14 times more return on investment than AB Low. However, Via Renewables is 1.14 times more volatile than AB Low Volatility. It trades about 0.31 of its potential returns per unit of risk. AB Low Volatility is currently generating about -0.15 per unit of risk. If you would invest  2,150  in Via Renewables on October 9, 2024 and sell it today you would earn a total of  117.00  from holding Via Renewables or generate 5.44% 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.  AB Low Volatility

Via Renewables

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 18 (%) 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.

AB Low Volatility

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AB Low Volatility are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, AB Low is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Via Renewables and AB Low

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

The idea behind Via Renewables and AB Low Volatility 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.