Correlation Between Via Renewables and FAT Brands
Can any of the company-specific risk be diversified away by investing in both Via Renewables and FAT Brands 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 Via Renewables and FAT Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Via Renewables and FAT Brands, you can compare the effects of market volatilities on Via Renewables and FAT Brands 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 Via Renewables with a short position of FAT Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and FAT Brands.
Diversification Opportunities for Via Renewables and FAT Brands
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Via and FAT is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and FAT Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAT Brands and Via Renewables 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 Via Renewables are associated (or correlated) with FAT Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAT Brands has no effect on the direction of Via Renewables i.e., Via Renewables and FAT Brands go up and down completely randomly.
Pair Corralation between Via Renewables and FAT Brands
Assuming the 90 days horizon Via Renewables is expected to generate 0.89 times more return on investment than FAT Brands. However, Via Renewables is 1.13 times less risky than FAT Brands. It trades about 0.07 of its potential returns per unit of risk. FAT Brands is currently generating about 0.01 per unit of risk. If you would invest 1,100 in Via Renewables on January 6, 2025 and sell it today you would earn a total of 1,221 from holding Via Renewables or generate 111.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Via Renewables vs. FAT Brands
Performance |
| Timeline |
| Via Renewables |
| FAT Brands |
Via Renewables and FAT Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Via Renewables and FAT Brands
The main advantage of trading using opposite Via Renewables and FAT Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables position performs unexpectedly, FAT Brands 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 FAT Brands will offset losses from the drop in FAT Brands' long position.| Via Renewables vs. CMS Energy | Via Renewables vs. ACRES Commercial Realty | Via Renewables vs. Atlanticus Holdings Corp |
| FAT Brands vs. FAT Brands | FAT Brands vs. Cannae Holdings | FAT Brands vs. Nathans Famous | FAT Brands vs. Dine Brands Global |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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