Correlation Between Via Renewables and FirstEnergy
Can any of the company-specific risk be diversified away by investing in both Via Renewables and FirstEnergy 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 FirstEnergy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Via Renewables and FirstEnergy, you can compare the effects of market volatilities on Via Renewables and FirstEnergy 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 FirstEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and FirstEnergy.
Diversification Opportunities for Via Renewables and FirstEnergy
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Via and FirstEnergy is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and FirstEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstEnergy 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 FirstEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstEnergy has no effect on the direction of Via Renewables i.e., Via Renewables and FirstEnergy go up and down completely randomly.
Pair Corralation between Via Renewables and FirstEnergy
Assuming the 90 days horizon Via Renewables is expected to under-perform the FirstEnergy. But the preferred stock apears to be less risky and, when comparing its historical volatility, Via Renewables is 1.77 times less risky than FirstEnergy. The preferred stock trades about -0.07 of its potential returns per unit of risk. The FirstEnergy is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,991 in FirstEnergy on November 2, 2024 and sell it today you would lose (19.00) from holding FirstEnergy or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Via Renewables vs. FirstEnergy
Performance |
| Timeline |
| Via Renewables |
| FirstEnergy |
Via Renewables and FirstEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Via Renewables and FirstEnergy
The main advantage of trading using opposite Via Renewables and FirstEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables position performs unexpectedly, FirstEnergy 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 FirstEnergy will offset losses from the drop in FirstEnergy's long position.| Via Renewables vs. CMS Energy | Via Renewables vs. ACRES Commercial Realty | Via Renewables vs. Atlanticus Holdings Corp |
| FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital | FirstEnergy vs. Edison International | FirstEnergy vs. Public Service Enterprise |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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