Correlation Between Via Renewables and Rev

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

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

Diversification Opportunities for Via Renewables and Rev

-0.47

Correlation Coefficient

Via Renewables  Rev

Very good diversification

The 3 months correlation between Via and Rev is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Rev Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rev Group 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 Rev. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rev Group has no effect on the direction of Via Renewables i.e., Via Renewables and Rev go up and down completely randomly.

Pair Corralation between Via Renewables and Rev

Assuming the 90 days horizon Via Renewables is expected to generate 1.31 times less return on investment than Rev. But when comparing it to its historical volatility, Via Renewables is 3.92 times less risky than Rev. It trades about 0.14 of its potential returns per unit of risk. Rev Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,185  in Rev Group on December 25, 2024 and sell it today you would earn a total of  173.00  from holding Rev Group or generate 5.43% return on investment over 90 days.

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

Via Renewables  vs.  Rev Group

Via Renewables

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Via Renewables is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Rev Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rev Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Rev may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Via Renewables and Rev

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

The idea behind Via Renewables and Rev Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.