Correlation Between Via Renewables and Schwab Core

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

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

Diversification Opportunities for Via Renewables and Schwab Core

0.45

Correlation Coefficient

Via Renewables  Schwab Core

Very weak diversification

The 3 months correlation between Via and Schwab is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Via Renewables and Schwab E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab E Equity 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 Schwab Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab E Equity has no effect on the direction of Via Renewables i.e., Via Renewables and Schwab Core go up and down completely randomly.

Pair Corralation between Via Renewables and Schwab Core

Assuming the 90 days horizon Via Renewables is expected to generate 1.18 times less return on investment than Schwab Core. In addition to that, Via Renewables is 1.62 times more volatile than Schwab E Equity. It trades about 0.08 of its total potential returns per unit of risk. Schwab E Equity is currently generating about 0.16 per unit of volatility. If you would invest  2,361  in Schwab E Equity on September 1, 2024 and sell it today you would earn a total of  183.00  from holding Schwab E Equity or generate 7.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Via Renewables  vs.  Schwab E Equity

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 December 2024.

Schwab E Equity

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Schwab E Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Schwab Core may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Via Renewables and Schwab Core

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

The idea behind Via Renewables and Schwab E Equity 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.