Correlation Between Via Renewables and Beacon Roofing

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

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

Diversification Opportunities for Via Renewables and Beacon Roofing

-0.44

Correlation Coefficient

Via Renewables  Beacon Roofing

Very good diversification

The 3 months correlation between Via and Beacon is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Beacon Roofing Supply in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beacon Roofing Supply 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 Beacon Roofing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beacon Roofing Supply has no effect on the direction of Via Renewables i.e., Via Renewables and Beacon Roofing go up and down completely randomly.

Pair Corralation between Via Renewables and Beacon Roofing

Assuming the 90 days horizon Via Renewables is expected to under-perform the Beacon Roofing. But the preferred stock apears to be less risky and, when comparing its historical volatility, Via Renewables is 1.57 times less risky than Beacon Roofing. The preferred stock trades about -0.05 of its potential returns per unit of risk. The Beacon Roofing Supply is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  8,613  in Beacon Roofing Supply on July 2, 2024 and sell it today you would earn a total of  159.00  from holding Beacon Roofing Supply or generate 1.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Via Renewables  vs.  Beacon Roofing Supply

Via Renewables

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Via Renewables are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Via Renewables is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Beacon Roofing Supply

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beacon Roofing Supply are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Beacon Roofing is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Via Renewables and Beacon Roofing

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

The idea behind Via Renewables and Beacon Roofing Supply 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.