Correlation Between Vistra Energy and Maxim Power
Can any of the company-specific risk be diversified away by investing in both Vistra Energy and Maxim Power 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 Maxim Power 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 Maxim Power Corp, you can compare the effects of market volatilities on Vistra Energy and Maxim Power 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 Maxim Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and Maxim Power.
Diversification Opportunities for Vistra Energy and Maxim Power
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vistra and Maxim is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and Maxim Power Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maxim Power Corp 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 Maxim Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maxim Power Corp has no effect on the direction of Vistra Energy i.e., Vistra Energy and Maxim Power go up and down completely randomly.
Pair Corralation between Vistra Energy and Maxim Power
Considering the 90-day investment horizon Vistra Energy Corp is expected to generate 1.0 times more return on investment than Maxim Power. However, Vistra Energy is 1.0 times more volatile than Maxim Power Corp. It trades about 0.33 of its potential returns per unit of risk. Maxim Power Corp is currently generating about 0.24 per unit of risk. If you would invest 12,778 in Vistra Energy Corp on August 27, 2024 and sell it today you would earn a total of 3,414 from holding Vistra Energy Corp or generate 26.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vistra Energy Corp vs. Maxim Power Corp
Performance |
| Timeline |
| Vistra Energy Corp |
| Maxim Power Corp |
Vistra Energy and Maxim Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vistra Energy and Maxim Power
The main advantage of trading using opposite Vistra Energy and Maxim Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vistra Energy position performs unexpectedly, Maxim Power 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 Maxim Power will offset losses from the drop in Maxim Power's long position.| Vistra Energy vs. Pampa Energia SA | Vistra Energy vs. TransAlta Corp | Vistra Energy vs. Kenon Holdings | Vistra Energy vs. NRG 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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