Correlation Between Vast Renewables and FTAI Infrastructure

Can any of the company-specific risk be diversified away by investing in both Vast Renewables and FTAI Infrastructure 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 Vast Renewables and FTAI Infrastructure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vast Renewables Limited and FTAI Infrastructure, you can compare the effects of market volatilities on Vast Renewables and FTAI Infrastructure 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 Vast Renewables with a short position of FTAI Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vast Renewables and FTAI Infrastructure.

Diversification Opportunities for Vast Renewables and FTAI Infrastructure

0.89

Correlation Coefficient

Vast Renewables  FTAI Infrastructure

Very poor diversification

The 3 months correlation between Vast and FTAI is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Vast Renewables Limited and FTAI Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Infrastructure and Vast Renewables 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 Vast Renewables Limited are associated (or correlated) with FTAI Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Infrastructure has no effect on the direction of Vast Renewables i.e., Vast Renewables and FTAI Infrastructure go up and down completely randomly.

Pair Corralation between Vast Renewables and FTAI Infrastructure

Given the investment horizon of 90 days Vast Renewables Limited is expected to under-perform the FTAI Infrastructure. In addition to that, Vast Renewables is 1.83 times more volatile than FTAI Infrastructure. It trades about -0.25 of its total potential returns per unit of risk. FTAI Infrastructure is currently generating about -0.14 per unit of volatility. If you would invest  707.00  in FTAI Infrastructure on December 27, 2024 and sell it today you would lose (214.00) from holding FTAI Infrastructure or give up 30.27% of portfolio value over 90 days.

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

Vast Renewables Limited  vs.  FTAI Infrastructure

Vast Renewables

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vast Renewables Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

FTAI Infrastructure

Risk-Adjusted Performance

Very Weak

Over the last 90 days FTAI Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Vast Renewables and FTAI Infrastructure

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

The idea behind Vast Renewables Limited and FTAI Infrastructure 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.