Correlation Between Via Renewables and Voya Vacs

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

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

Diversification Opportunities for Via Renewables and Voya Vacs

0.31

Correlation Coefficient

Via Renewables  Voya Vacs

Weak diversification

The 3 months correlation between Via and Voya is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Voya Vacs Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voya Vacs Index 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 Voya Vacs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voya Vacs Index has no effect on the direction of Via Renewables i.e., Via Renewables and Voya Vacs go up and down completely randomly.

Pair Corralation between Via Renewables and Voya Vacs

Assuming the 90 days horizon Via Renewables is expected to generate 2.31 times more return on investment than Voya Vacs. However, Via Renewables is 2.31 times more volatile than Voya Vacs Index. It trades about 0.09 of its potential returns per unit of risk. Voya Vacs Index is currently generating about 0.08 per unit of risk. If you would invest  1,560  in Via Renewables on October 7, 2024 and sell it today you would earn a total of  755.00  from holding Via Renewables or generate 48.4% return on investment over 90 days.

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

Via Renewables  vs.  Voya Vacs Index

Via Renewables

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Voya Vacs Index

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Voya Vacs Index are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Voya Vacs 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 Voya Vacs

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

The idea behind Via Renewables and Voya Vacs Index 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..