Correlation Between Via Renewables and Mastermind

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

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

Diversification Opportunities for Via Renewables and Mastermind

-0.06

Correlation Coefficient

Via Renewables  Mastermind

Good diversification

The 3 months correlation between Via and Mastermind is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Mastermind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastermind 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 Mastermind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastermind has no effect on the direction of Via Renewables i.e., Via Renewables and Mastermind go up and down completely randomly.

Pair Corralation between Via Renewables and Mastermind

Assuming the 90 days horizon Via Renewables is expected to generate 22.64 times less return on investment than Mastermind. But when comparing it to its historical volatility, Via Renewables is 7.82 times less risky than Mastermind. It trades about 0.03 of its potential returns per unit of risk. Mastermind is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4.00  in Mastermind on September 23, 2024 and sell it today you would earn a total of  1.00  from holding Mastermind or generate 25.0% return on investment over 90 days.

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

Via Renewables  vs.  Mastermind

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.

Mastermind

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mastermind are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Mastermind exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Via Renewables and Mastermind

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

The idea behind Via Renewables and Mastermind 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.