Correlation Between International Stem and Via Renewables

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

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

Diversification Opportunities for International Stem and Via Renewables

0.48

Correlation Coefficient

International Stem  Via Renewables

Very weak diversification

The 3 months correlation between International and Via is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding International Stem Cell and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and International Stem 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 International Stem Cell 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 International Stem i.e., International Stem and Via Renewables go up and down completely randomly.

Pair Corralation between International Stem and Via Renewables

Given the investment horizon of 90 days International Stem Cell is expected to generate 8.24 times more return on investment than Via Renewables. However, International Stem is 8.24 times more volatile than Via Renewables. It trades about 0.08 of its potential returns per unit of risk. Via Renewables is currently generating about 0.11 per unit of risk. If you would invest  15.00  in International Stem Cell on September 30, 2024 and sell it today you would lose (5.00) from holding International Stem Cell or give up 33.33% of portfolio value over 90 days.

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

International Stem Cell  vs.  Via Renewables

International Stem Cell

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Stem Cell are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, International Stem displayed solid returns over the last few months and may actually be approaching a breakup point.

Via Renewables

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Stem and Via Renewables

The main advantage of trading using opposite International Stem and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Stem 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 International Stem Cell 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.