Correlation Between Via Renewables and Fidelity Mega

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

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

Diversification Opportunities for Via Renewables and Fidelity Mega

0.53

Correlation Coefficient

Via Renewables  Fidelity Mega

Very weak diversification

The 3 months correlation between Via and Fidelity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Fidelity Mega Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Mega Cap and Via 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 Via Renewables are associated (or correlated) with Fidelity Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Mega Cap has no effect on the direction of Via Renewables i.e., Via Renewables and Fidelity Mega go up and down completely randomly.

Pair Corralation between Via Renewables and Fidelity Mega

Assuming the 90 days horizon Via Renewables is expected to generate 1.28 times less return on investment than Fidelity Mega. In addition to that, Via Renewables is 1.75 times more volatile than Fidelity Mega Cap. It trades about 0.09 of its total potential returns per unit of risk. Fidelity Mega Cap is currently generating about 0.21 per unit of volatility. If you would invest  2,415  in Fidelity Mega Cap on August 31, 2024 and sell it today you would earn a total of  218.00  from holding Fidelity Mega Cap or generate 9.03% return on investment over 90 days.

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

Via Renewables  vs.  Fidelity Mega Cap

Via Renewables

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Fidelity Mega Cap

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fidelity Mega Cap are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly inconsistent essential indicators, Fidelity Mega may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Via Renewables and Fidelity Mega

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

The idea behind Via Renewables and Fidelity Mega Cap 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.