Correlation Between Dominion Energy and Vast Renewables
Can any of the company-specific risk be diversified away by investing in both Dominion Energy and Vast 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 Dominion Energy and Vast Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dominion Energy and Vast Renewables Limited, you can compare the effects of market volatilities on Dominion Energy and Vast 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 Dominion Energy with a short position of Vast Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dominion Energy and Vast Renewables.
Diversification Opportunities for Dominion Energy and Vast Renewables
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dominion and Vast is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dominion Energy and Vast Renewables Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vast Renewables and Dominion 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 Dominion Energy are associated (or correlated) with Vast Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vast Renewables has no effect on the direction of Dominion Energy i.e., Dominion Energy and Vast Renewables go up and down completely randomly.
Pair Corralation between Dominion Energy and Vast Renewables
Taking into account the 90-day investment horizon Dominion Energy is expected to generate 53.43 times less return on investment than Vast Renewables. But when comparing it to its historical volatility, Dominion Energy is 18.95 times less risky than Vast Renewables. It trades about 0.03 of its potential returns per unit of risk. Vast Renewables Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 11.00 in Vast Renewables Limited on August 31, 2024 and sell it today you would lose (4.26) from holding Vast Renewables Limited or give up 38.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.43% |
| Values | Daily Returns |
Dominion Energy vs. Vast Renewables Limited
Performance |
| Timeline |
| Dominion Energy |
| Vast Renewables |
Dominion Energy and Vast Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dominion Energy and Vast Renewables
The main advantage of trading using opposite Dominion Energy and Vast Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dominion Energy position performs unexpectedly, Vast 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 Vast Renewables will offset losses from the drop in Vast Renewables' long position.| Dominion Energy vs. CenterPoint Energy | Dominion Energy vs. CMS Energy | Dominion Energy vs. IDACORP | Dominion Energy vs. Portland General Electric |
| Vast Renewables vs. Dominion Energy | Vast Renewables vs. Consolidated Edison | Vast Renewables vs. Eversource Energy | Vast Renewables vs. FirstEnergy |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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