Correlation Between Great Elm and Via Renewables
Can any of the company-specific risk be diversified away by investing in both Great Elm 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 Great Elm and Via Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Elm Group and Via Renewables, you can compare the effects of market volatilities on Great Elm 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 Great Elm with a short position of Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Elm and Via Renewables.
Diversification Opportunities for Great Elm and Via Renewables
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Great and Via is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Great Elm Group and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Great Elm 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 Great Elm Group 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 Great Elm i.e., Great Elm and Via Renewables go up and down completely randomly.
Pair Corralation between Great Elm and Via Renewables
Assuming the 90 days horizon Great Elm Group is expected to generate 0.71 times more return on investment than Via Renewables. However, Great Elm Group is 1.4 times less risky than Via Renewables. It trades about 0.1 of its potential returns per unit of risk. Via Renewables is currently generating about 0.03 per unit of risk. If you would invest 2,376 in Great Elm Group on November 27, 2024 and sell it today you would earn a total of 24.00 from holding Great Elm Group or generate 1.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Elm Group vs. Via Renewables
Performance |
| Timeline |
| Great Elm Group |
| Via Renewables |
Great Elm and Via Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Elm and Via Renewables
The main advantage of trading using opposite Great Elm and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Elm 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.The idea behind Great Elm Group and Via Renewables 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.| 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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