Correlation Between Via Renewables and Innovator Growth

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

By analyzing existing cross correlation between Via Renewables and Innovator Growth 100 Accelerated, you can compare the effects of market volatilities on Via Renewables and Innovator Growth 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 Innovator Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and Innovator Growth.

Diversification Opportunities for Via Renewables and Innovator Growth

0.88

Correlation Coefficient

Via Renewables  Innovator Growth

Very poor diversification

The 3 months correlation between Via and Innovator is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Innovator Growth 100 Accelerat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Growth 100 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 Innovator Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Growth 100 has no effect on the direction of Via Renewables i.e., Via Renewables and Innovator Growth go up and down completely randomly.

Pair Corralation between Via Renewables and Innovator Growth

Assuming the 90 days horizon Via Renewables is expected to generate 1.05 times more return on investment than Innovator Growth. However, Via Renewables is 1.05 times more volatile than Innovator Growth 100 Accelerated. It trades about 0.29 of its potential returns per unit of risk. Innovator Growth 100 Accelerated is currently generating about 0.23 per unit of risk. If you would invest  2,012  in Via Renewables on October 24, 2024 and sell it today you would earn a total of  308.00  from holding Via Renewables or generate 15.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Via Renewables  vs.  Innovator Growth 100 Accelerat

Via Renewables

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 22 (%) 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.

Innovator Growth 100

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator Growth 100 Accelerated are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Innovator Growth may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Via Renewables and Innovator Growth

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

The idea behind Via Renewables and Innovator Growth 100 Accelerated 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.