Correlation Between Via Renewables and Simt Core

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

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

Diversification Opportunities for Via Renewables and Simt Core

0.71

Correlation Coefficient

Via Renewables  Simt Core

Poor diversification

The 3 months correlation between Via and Simt is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Simt E Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simt E Fixed 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 Simt Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simt E Fixed has no effect on the direction of Via Renewables i.e., Via Renewables and Simt Core go up and down completely randomly.

Pair Corralation between Via Renewables and Simt Core

Assuming the 90 days horizon Via Renewables is expected to generate 2.19 times more return on investment than Simt Core. However, Via Renewables is 2.19 times more volatile than Simt E Fixed. It trades about 0.15 of its potential returns per unit of risk. Simt E Fixed is currently generating about 0.16 per unit of risk. If you would invest  2,269  in Via Renewables on December 24, 2024 and sell it today you would earn a total of  144.00  from holding Via Renewables or generate 6.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Via Renewables  vs.  Simt E Fixed

Via Renewables

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 11 (%) 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 April 2025.

Simt E Fixed

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Simt E Fixed are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Simt Core is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Via Renewables and Simt Core

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

The idea behind Via Renewables and Simt E Fixed 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 Global Correlations module to find global opportunities by holding instruments from different markets.