Correlation Between Via Renewables and IShares IBoxx

Can any of the company-specific risk be diversified away by investing in both Via Renewables and IShares IBoxx 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 IShares IBoxx into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Via Renewables and iShares iBoxx Investment, you can compare the effects of market volatilities on Via Renewables and IShares IBoxx 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 IShares IBoxx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Via Renewables and IShares IBoxx.

Diversification Opportunities for Via Renewables and IShares IBoxx

-0.21

Correlation Coefficient

Via Renewables  IShares IBoxx

Very good diversification

The 3 months correlation between Via and IShares is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and iShares iBoxx Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares iBoxx Investment 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 IShares IBoxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares iBoxx Investment has no effect on the direction of Via Renewables i.e., Via Renewables and IShares IBoxx go up and down completely randomly.

Pair Corralation between Via Renewables and IShares IBoxx

Assuming the 90 days horizon Via Renewables is expected to under-perform the IShares IBoxx. In addition to that, Via Renewables is 4.91 times more volatile than iShares iBoxx Investment. It trades about -0.17 of its total potential returns per unit of risk. iShares iBoxx Investment is currently generating about -0.25 per unit of volatility. If you would invest  10,850  in iShares iBoxx Investment on January 28, 2024 and sell it today you would lose (337.00) from holding iShares iBoxx Investment or give up 3.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Via Renewables  vs.  iShares iBoxx Investment

Via Renewables

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Via Renewables may actually be approaching a critical reversion point that can send shares even higher in May 2024.

iShares iBoxx Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares iBoxx Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, IShares IBoxx is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Via Renewables and IShares IBoxx

The main advantage of trading using opposite Via Renewables and IShares IBoxx positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Via Renewables position performs unexpectedly, IShares IBoxx 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 IShares IBoxx will offset losses from the drop in IShares IBoxx's long position.

The idea behind Via Renewables and iShares iBoxx Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.