Correlation Between Consumers Energy and Via Renewables
Can any of the company-specific risk be diversified away by investing in both Consumers 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 Consumers 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 Consumers Energy and Via Renewables, you can compare the effects of market volatilities on Consumers 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 Consumers Energy with a short position of Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumers Energy and Via Renewables.
Diversification Opportunities for Consumers Energy and Via Renewables
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Consumers and Via is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Consumers Energy and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Consumers 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 Consumers 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 Consumers Energy i.e., Consumers Energy and Via Renewables go up and down completely randomly.
Pair Corralation between Consumers Energy and Via Renewables
Assuming the 90 days trading horizon Consumers Energy is expected to generate 24.35 times less return on investment than Via Renewables. But when comparing it to its historical volatility, Consumers Energy is 1.86 times less risky than Via Renewables. It trades about 0.01 of its potential returns per unit of risk. Via Renewables is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 991.00 in Via Renewables on August 29, 2024 and sell it today you would earn a total of 1,214 from holding Via Renewables or generate 122.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consumers Energy vs. Via Renewables
Performance |
| Timeline |
| Consumers Energy |
| Via Renewables |
Consumers Energy and Via Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumers Energy and Via Renewables
The main advantage of trading using opposite Consumers Energy and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumers 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.| Consumers Energy vs. Nextera Energy | Consumers Energy vs. Duke Energy | Consumers Energy vs. PGE Corp | Consumers Energy vs. Southern Company |
| Via Renewables vs. CMS Energy | Via Renewables vs. ACRES Commercial Realty | Via Renewables vs. Atlanticus Holdings Corp |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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