Correlation Between Vistra Energy and Chocoladefabriken

Can any of the company-specific risk be diversified away by investing in both Vistra Energy and Chocoladefabriken 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 Chocoladefabriken 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 Chocoladefabriken Lindt Sprngli, you can compare the effects of market volatilities on Vistra Energy and Chocoladefabriken 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 Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and Chocoladefabriken.

Diversification Opportunities for Vistra Energy and Chocoladefabriken

-0.57

Correlation Coefficient

Vistra Energy  Chocoladefabriken

Excellent diversification

The 3 months correlation between Vistra and Chocoladefabriken is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt 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 Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Vistra Energy i.e., Vistra Energy and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Vistra Energy and Chocoladefabriken

Considering the 90-day investment horizon Vistra Energy Corp is expected to generate 1.34 times more return on investment than Chocoladefabriken. However, Vistra Energy is 1.34 times more volatile than Chocoladefabriken Lindt Sprngli. It trades about 0.16 of its potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about 0.04 per unit of risk. If you would invest  14,576  in Vistra Energy Corp on October 12, 2024 and sell it today you would earn a total of  1,505  from holding Vistra Energy Corp or generate 10.33% return on investment over 90 days.

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

Vistra Energy Corp  vs.  Chocoladefabriken Lindt Sprngl

Vistra Energy Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vistra Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Vistra Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Sprngli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile 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 Vistra Energy and Chocoladefabriken

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

The idea behind Vistra Energy Corp and Chocoladefabriken Lindt Sprngli 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.