Correlation Between Via Renewables and Sierra Core

Can any of the company-specific risk be diversified away by investing in both Via Renewables and Sierra 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 Sierra 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 Sierra E Retirement, you can compare the effects of market volatilities on Via Renewables and Sierra 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 Sierra Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and Sierra Core.

Diversification Opportunities for Via Renewables and Sierra Core

-0.47

Correlation Coefficient

Via Renewables  Sierra Core

Very good diversification

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

Pair Corralation between Via Renewables and Sierra Core

Assuming the 90 days horizon Via Renewables is expected to generate 1.69 times more return on investment than Sierra Core. However, Via Renewables is 1.69 times more volatile than Sierra E Retirement. It trades about 0.14 of its potential returns per unit of risk. Sierra E Retirement is currently generating about -0.06 per unit of risk. If you would invest  2,286  in Via Renewables on December 27, 2024 and sell it today you would earn a total of  137.00  from holding Via Renewables or generate 5.99% 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.  Sierra E Retirement

Via Renewables

Risk-Adjusted Performance

OK

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 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.

Sierra E Retirement

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sierra E Retirement has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Sierra 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 Sierra Core

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

The idea behind Via Renewables and Sierra E Retirement 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.