Correlation Between Vistra Energy and Southwest Gas
Can any of the company-specific risk be diversified away by investing in both Vistra Energy and Southwest Gas 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 Southwest Gas 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 Southwest Gas Holdings, you can compare the effects of market volatilities on Vistra Energy and Southwest Gas 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 Southwest Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and Southwest Gas.
Diversification Opportunities for Vistra Energy and Southwest Gas
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vistra and Southwest is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and Southwest Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Gas Holdings 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 Southwest Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Gas Holdings has no effect on the direction of Vistra Energy i.e., Vistra Energy and Southwest Gas go up and down completely randomly.
Pair Corralation between Vistra Energy and Southwest Gas
Considering the 90-day investment horizon Vistra Energy is expected to generate 1.62 times less return on investment than Southwest Gas. In addition to that, Vistra Energy is 4.69 times more volatile than Southwest Gas Holdings. It trades about 0.02 of its total potential returns per unit of risk. Southwest Gas Holdings is currently generating about 0.14 per unit of volatility. If you would invest 6,967 in Southwest Gas Holdings on November 30, 2024 and sell it today you would earn a total of 538.00 from holding Southwest Gas Holdings or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vistra Energy Corp vs. Southwest Gas Holdings
Performance |
| Timeline |
| Vistra Energy Corp |
| Southwest Gas Holdings |
Vistra Energy and Southwest Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vistra Energy and Southwest Gas
The main advantage of trading using opposite Vistra Energy and Southwest Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vistra Energy position performs unexpectedly, Southwest Gas 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 Southwest Gas will offset losses from the drop in Southwest Gas' long position.| Vistra Energy vs. Pampa Energia SA | Vistra Energy vs. TransAlta Corp | Vistra Energy vs. Kenon Holdings | Vistra Energy vs. NRG Energy |
| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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