Correlation Between Via Renewables and Vanguard Commodity

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

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

Diversification Opportunities for Via Renewables and Vanguard Commodity

0.71

Correlation Coefficient

Via Renewables  Vanguard Commodity

Poor diversification

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

Pair Corralation between Via Renewables and Vanguard Commodity

Assuming the 90 days horizon Via Renewables is expected to generate 1.21 times more return on investment than Vanguard Commodity. However, Via Renewables is 1.21 times more volatile than Vanguard Commodity Strategy. It trades about 0.23 of its potential returns per unit of risk. Vanguard Commodity Strategy is currently generating about 0.17 per unit of risk. If you would invest  2,148  in Via Renewables on December 4, 2024 and sell it today you would earn a total of  243.00  from holding Via Renewables or generate 11.31% return on investment over 90 days.

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

Via Renewables  vs.  Vanguard Commodity Strategy

Via Renewables

Risk-Adjusted Performance

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 may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vanguard Commodity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vanguard Commodity Strategy are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Vanguard Commodity may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Via Renewables and Vanguard Commodity

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

The idea behind Via Renewables and Vanguard Commodity Strategy 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.