Correlation Between Via Renewables and WisdomTree

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

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

Diversification Opportunities for Via Renewables and WisdomTree

0.66

Correlation Coefficient

Via Renewables  WisdomTree

Poor diversification

The 3 months correlation between Via and WisdomTree is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and WisdomTree in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree 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 WisdomTree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree has no effect on the direction of Via Renewables i.e., Via Renewables and WisdomTree go up and down completely randomly.

Pair Corralation between Via Renewables and WisdomTree

Assuming the 90 days horizon Via Renewables is expected to generate 1.47 times less return on investment than WisdomTree. In addition to that, Via Renewables is 1.68 times more volatile than WisdomTree. It trades about 0.03 of its total potential returns per unit of risk. WisdomTree is currently generating about 0.08 per unit of volatility. If you would invest  546.00  in WisdomTree on September 28, 2024 and sell it today you would earn a total of  523.00  from holding WisdomTree or generate 95.79% 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.  WisdomTree

Via Renewables

Risk-Adjusted Performance

26 of 100

Good

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.

WisdomTree

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WisdomTree are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, WisdomTree may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Via Renewables and WisdomTree

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

The idea behind Via Renewables and WisdomTree 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.