Correlation Between Global Energy and Vistra Energy

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

By analyzing existing cross correlation between Global Energy Networks and Vistra Energy Corp, you can compare the effects of market volatilities on Global Energy and Vistra Energy 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 Global Energy with a short position of Vistra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Energy and Vistra Energy.

Diversification Opportunities for Global Energy and Vistra Energy

0.0

Correlation Coefficient

Global Energy  Vistra Energy

Pay attention - limited upside

The 3 months correlation between Global and Vistra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Global Energy Networks and Vistra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vistra Energy Corp and Global 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 Global Energy Networks are associated (or correlated) with Vistra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vistra Energy Corp has no effect on the direction of Global Energy i.e., Global Energy and Vistra Energy go up and down completely randomly.

Pair Corralation between Global Energy and Vistra Energy

If you would invest  13,116  in Vistra Energy Corp on August 19, 2024 and sell it today you would earn a total of  1,099  from holding Vistra Energy Corp or generate 8.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Global Energy Networks  vs.  Vistra Energy Corp

Global Energy Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Energy Networks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Global Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Vistra Energy Corp

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vistra Energy Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Vistra Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Global Energy and Vistra Energy

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

The idea behind Global Energy Networks and Vistra Energy Corp 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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.