Correlation Between Vistra Energy and One Gas

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

Diversification Opportunities for Vistra Energy and One Gas

-0.53

Correlation Coefficient

Vistra Energy  One Gas

Excellent diversification

The 3 months correlation between Vistra and One is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and One Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on One Gas 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 One Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of One Gas has no effect on the direction of Vistra Energy i.e., Vistra Energy and One Gas go up and down completely randomly.

Pair Corralation between Vistra Energy and One Gas

Considering the 90-day investment horizon Vistra Energy is expected to generate 2.13 times less return on investment than One Gas. In addition to that, Vistra Energy is 4.68 times more volatile than One Gas. It trades about 0.01 of its total potential returns per unit of risk. One Gas is currently generating about 0.07 per unit of volatility. If you would invest  6,929  in One Gas on December 26, 2024 and sell it today you would earn a total of  354.00  from holding One Gas or generate 5.11% 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.  One Gas

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.

One Gas

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in One Gas are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, One Gas is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vistra Energy and One Gas

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

The idea behind Vistra Energy Corp and One Gas 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..