Correlation Between Dominion Energy and Via Renewables

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

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

Diversification Opportunities for Dominion Energy and Via Renewables

-0.08

Correlation Coefficient

Dominion Energy  Via Renewables

Good diversification

The 3 months correlation between Dominion and Via is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Dominion 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 Dominion Energy are associated (or correlated) with Via Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Via Renewables has no effect on the direction of Dominion Energy i.e., Dominion Energy and Via Renewables go up and down completely randomly.

Pair Corralation between Dominion Energy and Via Renewables

If you would invest  786.00  in Via Renewables on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Via Renewables or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.38%
Values	Daily Returns

Dominion Energy  vs.  Via Renewables

Dominion Energy

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Dominion Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Dominion Energy is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Via Renewables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Via Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Via Renewables is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dominion Energy and Via Renewables

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

The idea behind Dominion Energy and Via Renewables 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.