Correlation Between Vita Coco and NRG Energy
Can any of the company-specific risk be diversified away by investing in both Vita Coco and NRG Energy 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 Vita Coco and NRG Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and NRG Energy, you can compare the effects of market volatilities on Vita Coco and NRG Energy 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 Vita Coco with a short position of NRG Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and NRG Energy.
Diversification Opportunities for Vita Coco and NRG Energy
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vita and NRG is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and NRG Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRG Energy and Vita Coco 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 Vita Coco are associated (or correlated) with NRG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRG Energy has no effect on the direction of Vita Coco i.e., Vita Coco and NRG Energy go up and down completely randomly.
Pair Corralation between Vita Coco and NRG Energy
Given the investment horizon of 90 days Vita Coco is expected to generate 2.3 times less return on investment than NRG Energy. In addition to that, Vita Coco is 1.14 times more volatile than NRG Energy. It trades about 0.06 of its total potential returns per unit of risk. NRG Energy is currently generating about 0.15 per unit of volatility. If you would invest 4,639 in NRG Energy on September 2, 2024 and sell it today you would earn a total of 5,522 from holding NRG Energy or generate 119.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vita Coco vs. NRG Energy
Performance |
| Timeline |
| Vita Coco |
| NRG Energy |
Vita Coco and NRG Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vita Coco and NRG Energy
The main advantage of trading using opposite Vita Coco and NRG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco position performs unexpectedly, NRG Energy 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 NRG Energy will offset losses from the drop in NRG Energy's long position.| Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |