Correlation Between Vistra Energy and TKO Group

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

Diversification Opportunities for Vistra Energy and TKO Group

0.56

Correlation Coefficient

Vistra Energy  TKO Group

Very weak diversification

The 3 months correlation between Vistra and TKO is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and TKO Group Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKO Group Holdings, 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 TKO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKO Group Holdings, has no effect on the direction of Vistra Energy i.e., Vistra Energy and TKO Group go up and down completely randomly.

Pair Corralation between Vistra Energy and TKO Group

Considering the 90-day investment horizon Vistra Energy Corp is expected to under-perform the TKO Group. In addition to that, Vistra Energy is 2.09 times more volatile than TKO Group Holdings,. It trades about -0.09 of its total potential returns per unit of risk. TKO Group Holdings, is currently generating about 0.2 per unit of volatility. If you would invest  13,279  in TKO Group Holdings, on September 21, 2024 and sell it today you would earn a total of  1,075  from holding TKO Group Holdings, or generate 8.1% return on investment over 90 days.

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

Vistra Energy Corp  vs.  TKO Group Holdings,

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 weak basic indicators, Vistra Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

TKO Group Holdings,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TKO Group Holdings, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward-looking signals, TKO Group displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vistra Energy and TKO Group

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

The idea behind Vistra Energy Corp and TKO Group Holdings, 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.