Correlation Between Via Renewables and First Trust
Can any of the company-specific risk be diversified away by investing in both Via Renewables and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Via Renewables and First Trust LongShort, you can compare the effects of market volatilities on Via Renewables and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and First Trust.
Diversification Opportunities for Via Renewables and First Trust
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Via and First is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and First Trust LongShort in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust LongShort 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust LongShort has no effect on the direction of Via Renewables i.e., Via Renewables and First Trust go up and down completely randomly.
Pair Corralation between Via Renewables and First Trust
Assuming the 90 days horizon Via Renewables is expected to generate 2.54 times more return on investment than First Trust. However, Via Renewables is 2.54 times more volatile than First Trust LongShort. It trades about 0.09 of its potential returns per unit of risk. First Trust LongShort is currently generating about 0.18 per unit of risk. If you would invest 2,138 in Via Renewables on August 25, 2024 and sell it today you would earn a total of 108.00 from holding Via Renewables or generate 5.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Via Renewables vs. First Trust LongShort
Performance |
| Timeline |
| Via Renewables |
| First Trust LongShort |
Via Renewables and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Via Renewables and First Trust
The main advantage of trading using opposite Via Renewables and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Via Renewables vs. Centrais Eltricas Brasileiras | Via Renewables vs. Nextera Energy | Via Renewables vs. Consumers Energy | Via Renewables vs. CMS Energy |
| First Trust vs. First Trust Managed | First Trust vs. IQ Hedge Multi Strategy | First Trust vs. First Trust BuyWrite | First Trust vs. SPDR SSgA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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