Correlation Between Vista Energy, and Longvie SA

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

By analyzing existing cross correlation between Vista Energy, SAB and Longvie SA, you can compare the effects of market volatilities on Vista Energy, and Longvie SA 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 Vista Energy, with a short position of Longvie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vista Energy, and Longvie SA.

Diversification Opportunities for Vista Energy, and Longvie SA

0.68

Correlation Coefficient

Vista Energy,  Longvie SA

Poor diversification

The 3 months correlation between Vista and Longvie is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vista Energy, SAB and Longvie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longvie SA and Vista Energy, 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 Vista Energy, SAB are associated (or correlated) with Longvie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longvie SA has no effect on the direction of Vista Energy, i.e., Vista Energy, and Longvie SA go up and down completely randomly.

Pair Corralation between Vista Energy, and Longvie SA

Assuming the 90 days trading horizon Vista Energy, SAB is expected to under-perform the Longvie SA. In addition to that, Vista Energy, is 1.14 times more volatile than Longvie SA. It trades about -0.06 of its total potential returns per unit of risk. Longvie SA is currently generating about -0.06 per unit of volatility. If you would invest  3,635  in Longvie SA on December 28, 2024 and sell it today you would lose (460.00) from holding Longvie SA or give up 12.65% of portfolio value over 90 days.

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

Vista Energy, SAB  vs.  Longvie SA

Vista Energy, SAB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vista Energy, SAB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Longvie SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Longvie SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Vista Energy, and Longvie SA

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

The idea behind Vista Energy, SAB and Longvie SA 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.