Correlation Between Vistra Energy and Atlantic Sapphire

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

By analyzing existing cross correlation between Vistra Energy Corp and Atlantic Sapphire ASA, you can compare the effects of market volatilities on Vistra Energy and Atlantic Sapphire 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 Vistra Energy with a short position of Atlantic Sapphire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and Atlantic Sapphire.

Diversification Opportunities for Vistra Energy and Atlantic Sapphire

0.5

Correlation Coefficient

Vistra Energy  Atlantic Sapphire

Very weak diversification

The 3 months correlation between Vistra and Atlantic is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and Atlantic Sapphire ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantic Sapphire ASA and Vistra 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 Vistra Energy Corp are associated (or correlated) with Atlantic Sapphire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantic Sapphire ASA has no effect on the direction of Vistra Energy i.e., Vistra Energy and Atlantic Sapphire go up and down completely randomly.

Pair Corralation between Vistra Energy and Atlantic Sapphire

Considering the 90-day investment horizon Vistra Energy Corp is expected to generate 0.39 times more return on investment than Atlantic Sapphire. However, Vistra Energy Corp is 2.53 times less risky than Atlantic Sapphire. It trades about -0.01 of its potential returns per unit of risk. Atlantic Sapphire ASA is currently generating about -0.12 per unit of risk. If you would invest  13,985  in Vistra Energy Corp on December 28, 2024 and sell it today you would lose (2,080) from holding Vistra Energy Corp or give up 14.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Vistra Energy Corp  vs.  Atlantic Sapphire ASA

Vistra Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vistra Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Vistra Energy is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Atlantic Sapphire ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atlantic Sapphire ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Vistra Energy and Atlantic Sapphire

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

The idea behind Vistra Energy Corp and Atlantic Sapphire ASA 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.