Correlation Between Advent Technologies and Brookfield Renewable
Can any of the company-specific risk be diversified away by investing in both Advent Technologies 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 Advent Technologies and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advent Technologies Holdings and Brookfield Renewable Corp, you can compare the effects of market volatilities on Advent Technologies 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 Advent Technologies with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advent Technologies and Brookfield Renewable.
Diversification Opportunities for Advent Technologies and Brookfield Renewable
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Advent and Brookfield is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Advent Technologies Holdings and Brookfield Renewable Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable Corp and Advent Technologies 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 Advent Technologies Holdings 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 Corp has no effect on the direction of Advent Technologies i.e., Advent Technologies and Brookfield Renewable go up and down completely randomly.
Pair Corralation between Advent Technologies and Brookfield Renewable
Assuming the 90 days horizon Advent Technologies Holdings is expected to generate 4.43 times more return on investment than Brookfield Renewable. However, Advent Technologies is 4.43 times more volatile than Brookfield Renewable Corp. It trades about 0.11 of its potential returns per unit of risk. Brookfield Renewable Corp is currently generating about -0.01 per unit of risk. If you would invest 0.98 in Advent Technologies Holdings on August 27, 2024 and sell it today you would earn a total of 0.14 from holding Advent Technologies Holdings or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advent Technologies Holdings vs. Brookfield Renewable Corp
Performance |
| Timeline |
| Advent Technologies |
| Brookfield Renewable Corp |
Advent Technologies and Brookfield Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advent Technologies and Brookfield Renewable
The main advantage of trading using opposite Advent Technologies and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advent Technologies 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.The idea behind Advent Technologies Holdings and Brookfield Renewable 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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