Correlation Between Vistra Energy and Marimaca Copper

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

Diversification Opportunities for Vistra Energy and Marimaca Copper

0.81

Correlation Coefficient

Vistra Energy  Marimaca Copper

Very poor diversification

The 3 months correlation between Vistra and Marimaca is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and Marimaca Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marimaca Copper Corp 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 Marimaca Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marimaca Copper Corp has no effect on the direction of Vistra Energy i.e., Vistra Energy and Marimaca Copper go up and down completely randomly.

Pair Corralation between Vistra Energy and Marimaca Copper

Considering the 90-day investment horizon Vistra Energy Corp is expected to generate 0.88 times more return on investment than Marimaca Copper. However, Vistra Energy Corp is 1.13 times less risky than Marimaca Copper. It trades about 0.13 of its potential returns per unit of risk. Marimaca Copper Corp is currently generating about 0.04 per unit of risk. If you would invest  14,807  in Vistra Energy Corp on October 10, 2024 and sell it today you would earn a total of  1,274  from holding Vistra Energy Corp or generate 8.6% return on investment over 90 days.

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

Vistra Energy Corp  vs.  Marimaca Copper Corp

Vistra Energy Corp

Risk-Adjusted Performance

10 of 100

OK

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

Marimaca Copper Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Marimaca Copper Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Marimaca Copper reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vistra Energy and Marimaca Copper

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

The idea behind Vistra Energy Corp and Marimaca Copper 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.