Correlation Between Via Renewables and Exxon

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

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

Diversification Opportunities for Via Renewables and Exxon

0.71

Correlation Coefficient

Via Renewables  Exxon

Poor diversification

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

Pair Corralation between Via Renewables and Exxon

Assuming the 90 days horizon Via Renewables is expected to generate 2.22 times less return on investment than Exxon. But when comparing it to its historical volatility, Via Renewables is 2.04 times less risky than Exxon. It trades about 0.13 of its potential returns per unit of risk. Exxon Mobil Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  10,555  in Exxon Mobil Corp on December 26, 2024 and sell it today you would earn a total of  1,270  from holding Exxon Mobil Corp or generate 12.03% 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.  Exxon Mobil Corp

Via Renewables

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 10 (%) 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.

Exxon Mobil Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exxon Mobil Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Exxon may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Via Renewables and Exxon

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

The idea behind Via Renewables and Exxon Mobil Corp 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.