Correlation Between Vistra Energy and Universal
Can any of the company-specific risk be diversified away by investing in both Vistra Energy and Universal 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 Universal 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 Universal, you can compare the effects of market volatilities on Vistra Energy and Universal 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 Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vistra Energy and Universal.
Diversification Opportunities for Vistra Energy and Universal
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vistra and Universal is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Vistra Energy Corp and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Vistra Energy i.e., Vistra Energy and Universal go up and down completely randomly.
Pair Corralation between Vistra Energy and Universal
Considering the 90-day investment horizon Vistra Energy Corp is expected to generate 2.91 times more return on investment than Universal. However, Vistra Energy is 2.91 times more volatile than Universal. It trades about 0.13 of its potential returns per unit of risk. Universal is currently generating about 0.13 per unit of risk. If you would invest 9,154 in Vistra Energy Corp on September 3, 2024 and sell it today you would earn a total of 6,830 from holding Vistra Energy Corp or generate 74.61% 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. Universal
Performance |
| Timeline |
| Vistra Energy Corp |
| Universal |
Vistra Energy and Universal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vistra Energy and Universal
The main advantage of trading using opposite Vistra Energy and Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vistra Energy position performs unexpectedly, Universal 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 Universal will offset losses from the drop in Universal's long position.| Vistra Energy vs. Pampa Energia SA | Vistra Energy vs. TransAlta Corp | Vistra Energy vs. Kenon Holdings | Vistra Energy vs. NRG Energy |
| Universal vs. Imperial Brands PLC | Universal vs. Japan Tobacco ADR | Universal vs. Philip Morris International | Universal vs. Turning Point Brands |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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