Correlation Between Via Renewables and Metal Sky

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

By analyzing existing cross correlation between Via Renewables and Metal Sky Star, you can compare the effects of market volatilities on Via Renewables and Metal Sky 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 Metal Sky. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and Metal Sky.

Diversification Opportunities for Via Renewables and Metal Sky

0.65

Correlation Coefficient

Via Renewables  Metal Sky

Poor diversification

The 3 months correlation between Via and Metal is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Metal Sky Star in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metal Sky Star 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 Metal Sky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metal Sky Star has no effect on the direction of Via Renewables i.e., Via Renewables and Metal Sky go up and down completely randomly.

Pair Corralation between Via Renewables and Metal Sky

Assuming the 90 days horizon Via Renewables is expected to generate 0.8 times more return on investment than Metal Sky. However, Via Renewables is 1.25 times less risky than Metal Sky. It trades about 0.32 of its potential returns per unit of risk. Metal Sky Star is currently generating about 0.01 per unit of risk. If you would invest  2,090  in Via Renewables on September 26, 2024 and sell it today you would earn a total of  250.00  from holding Via Renewables or generate 11.96% return on investment over 90 days.

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

Via Renewables  vs.  Metal Sky Star

Via Renewables

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 14 (%) 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.

Metal Sky Star

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Metal Sky Star are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Metal Sky is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Via Renewables and Metal Sky

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

The idea behind Via Renewables and Metal Sky Star 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.