Correlation Between Vistra Energy and Centrica Plc
Can any of the company-specific risk be diversified away by investing in both Vistra Energy and Centrica Plc 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 Vistra Energy and Centrica Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vistra Energy Corp and Centrica plc, you can compare the effects of market volatilities on Vistra Energy and Centrica Plc 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 Vistra Energy with a short position of Centrica Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and Centrica Plc.
Diversification Opportunities for Vistra Energy and Centrica Plc
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vistra and Centrica is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and Centrica plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrica plc and Vistra 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 Vistra Energy Corp are associated (or correlated) with Centrica Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrica plc has no effect on the direction of Vistra Energy i.e., Vistra Energy and Centrica Plc go up and down completely randomly.
Pair Corralation between Vistra Energy and Centrica Plc
Considering the 90-day investment horizon Vistra Energy Corp is expected to generate 1.21 times more return on investment than Centrica Plc. However, Vistra Energy is 1.21 times more volatile than Centrica plc. It trades about 0.13 of its potential returns per unit of risk. Centrica plc is currently generating about 0.01 per unit of risk. If you would invest 8,283 in Vistra Energy Corp on September 3, 2024 and sell it today you would earn a total of 7,701 from holding Vistra Energy Corp or generate 92.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.73% |
| Values | Daily Returns |
Vistra Energy Corp vs. Centrica plc
Performance |
| Timeline |
| Vistra Energy Corp |
| Centrica plc |
Vistra Energy and Centrica Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vistra Energy and Centrica Plc
The main advantage of trading using opposite Vistra Energy and Centrica Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vistra Energy position performs unexpectedly, Centrica Plc 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 Centrica Plc will offset losses from the drop in Centrica Plc's long position.| Vistra Energy vs. Pampa Energia SA | Vistra Energy vs. TransAlta Corp | Vistra Energy vs. Kenon Holdings | Vistra Energy vs. NRG Energy |
| Centrica Plc vs. Vistra Energy Corp | Centrica Plc vs. Fibra UNO | Centrica Plc vs. Lloyds Banking Group | Centrica Plc vs. PT Kalbe Farma |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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