Correlation Between Talen Energy and Via Renewables
Can any of the company-specific risk be diversified away by investing in both Talen 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 Talen 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 Talen Energy and Via Renewables, you can compare the effects of market volatilities on Talen 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 Talen Energy with a short position of Via Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talen Energy and Via Renewables.
Diversification Opportunities for Talen Energy and Via Renewables
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Talen and Via is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Talen Energy and Via Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Via Renewables and Talen 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 Talen 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 Talen Energy i.e., Talen Energy and Via Renewables go up and down completely randomly.
Pair Corralation between Talen Energy and Via Renewables
Considering the 90-day investment horizon Talen Energy is expected to generate 0.45 times more return on investment than Via Renewables. However, Talen Energy is 2.25 times less risky than Via Renewables. It trades about 0.18 of its potential returns per unit of risk. Via Renewables is currently generating about -0.12 per unit of risk. If you would invest 4,650 in Talen Energy on August 24, 2024 and sell it today you would earn a total of 16,770 from holding Talen Energy or generate 360.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 42.63% |
| Values | Daily Returns |
Talen Energy vs. Via Renewables
Performance |
| Timeline |
| Talen Energy |
| Via Renewables |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Talen Energy and Via Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talen Energy and Via Renewables
The main advantage of trading using opposite Talen Energy and Via Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talen 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.| Talen Energy vs. Constellation Brands Class | Talen Energy vs. Playstudios | Talen Energy vs. Fomento Economico Mexicano | Talen Energy vs. Golden Matrix Group |
| Via Renewables vs. Entergy Texas | Via Renewables vs. Centrais Electricas Brasileiras | Via Renewables vs. IDACORP | Via Renewables vs. MGE 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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