Correlation Between Vistra Energy and Transportadora

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

Diversification Opportunities for Vistra Energy and Transportadora

0.73

Correlation Coefficient

Vistra Energy  Transportadora

Poor diversification

The 3 months correlation between Vistra and Transportadora is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and Transportadora de Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportadora de 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 Transportadora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportadora de Gas has no effect on the direction of Vistra Energy i.e., Vistra Energy and Transportadora go up and down completely randomly.

Pair Corralation between Vistra Energy and Transportadora

Considering the 90-day investment horizon Vistra Energy Corp is expected to generate 1.57 times more return on investment than Transportadora. However, Vistra Energy is 1.57 times more volatile than Transportadora de Gas. It trades about 0.23 of its potential returns per unit of risk. Transportadora de Gas is currently generating about 0.2 per unit of risk. If you would invest  8,028  in Vistra Energy Corp on September 12, 2024 and sell it today you would earn a total of  6,124  from holding Vistra Energy Corp or generate 76.28% return on investment over 90 days.

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

Vistra Energy Corp  vs.  Transportadora de Gas

Vistra Energy Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vistra Energy Corp are ranked lower than 18 (%) 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.

Transportadora de Gas

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Transportadora de Gas are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Transportadora unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vistra Energy and Transportadora

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

The idea behind Vistra Energy Corp and Transportadora de 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.