Correlation Between Vast Renewables and Consolidated Edison

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

By analyzing existing cross correlation between Vast Renewables Limited and Consolidated Edison, you can compare the effects of market volatilities on Vast Renewables and Consolidated Edison 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 Vast Renewables with a short position of Consolidated Edison. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vast Renewables and Consolidated Edison.

Diversification Opportunities for Vast Renewables and Consolidated Edison

-0.62

Correlation Coefficient

Vast Renewables  Consolidated Edison

Excellent diversification

The 3 months correlation between Vast and Consolidated is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vast Renewables Limited and Consolidated Edison in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consolidated Edison and Vast 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 Vast Renewables Limited are associated (or correlated) with Consolidated Edison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consolidated Edison has no effect on the direction of Vast Renewables i.e., Vast Renewables and Consolidated Edison go up and down completely randomly.

Pair Corralation between Vast Renewables and Consolidated Edison

Assuming the 90 days horizon Vast Renewables Limited is expected to generate 19.54 times more return on investment than Consolidated Edison. However, Vast Renewables is 19.54 times more volatile than Consolidated Edison. It trades about 0.08 of its potential returns per unit of risk. Consolidated Edison is currently generating about 0.01 per unit of risk. If you would invest  12.00  in Vast Renewables Limited on September 22, 2024 and sell it today you would lose (2.24) from holding Vast Renewables Limited or give up 18.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	87.4%
Values	Daily Returns

Vast Renewables Limited  vs.  Consolidated Edison

Vast Renewables

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vast Renewables Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal technical and fundamental indicators, Vast Renewables showed solid returns over the last few months and may actually be approaching a breakup point.

Consolidated Edison

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consolidated Edison has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Vast Renewables and Consolidated Edison

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

The idea behind Vast Renewables Limited and Consolidated Edison 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.

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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.