Correlation Between Apple and Brookfield Renewable
Can any of the company-specific risk be diversified away by investing in both Apple and Brookfield Renewable 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 Apple and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apple Inc CDR and Brookfield Renewable Partners, you can compare the effects of market volatilities on Apple and Brookfield Renewable 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 Apple with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apple and Brookfield Renewable.
Diversification Opportunities for Apple and Brookfield Renewable
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Apple and Brookfield is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Apple Inc CDR and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Apple 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 Apple Inc CDR are associated (or correlated) with Brookfield Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Renewable has no effect on the direction of Apple i.e., Apple and Brookfield Renewable go up and down completely randomly.
Pair Corralation between Apple and Brookfield Renewable
Assuming the 90 days trading horizon Apple Inc CDR is expected to generate 0.69 times more return on investment than Brookfield Renewable. However, Apple Inc CDR is 1.44 times less risky than Brookfield Renewable. It trades about -0.03 of its potential returns per unit of risk. Brookfield Renewable Partners is currently generating about -0.24 per unit of risk. If you would invest 3,463 in Apple Inc CDR on October 22, 2024 and sell it today you would lose (101.00) from holding Apple Inc CDR or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Apple Inc CDR vs. Brookfield Renewable Partners
Performance |
| Timeline |
| Apple Inc CDR |
| Brookfield Renewable |
Apple and Brookfield Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apple and Brookfield Renewable
The main advantage of trading using opposite Apple and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apple position performs unexpectedly, Brookfield Renewable 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 Brookfield Renewable will offset losses from the drop in Brookfield Renewable's long position.| Apple vs. Data Communications Management | Apple vs. Rogers Communications | Apple vs. Hemisphere Energy | Apple vs. Advent Wireless |
| Brookfield Renewable vs. Brookfield Infrastructure Partners | Brookfield Renewable vs. Algonquin Power Utilities | Brookfield Renewable vs. Northland Power | Brookfield Renewable vs. Fortis Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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