Correlation Between Altus Power and Brookfield Renewable
Can any of the company-specific risk be diversified away by investing in both Altus Power 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 Altus Power and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altus Power and Brookfield Renewable Corp, you can compare the effects of market volatilities on Altus Power 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 Altus Power with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and Brookfield Renewable.
Diversification Opportunities for Altus Power and Brookfield Renewable
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Altus and Brookfield is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power 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 Altus Power 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 Altus Power 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 Altus Power i.e., Altus Power and Brookfield Renewable go up and down completely randomly.
Pair Corralation between Altus Power and Brookfield Renewable
Given the investment horizon of 90 days Altus Power is expected to generate 2.91 times more return on investment than Brookfield Renewable. However, Altus Power is 2.91 times more volatile than Brookfield Renewable Corp. It trades about 0.1 of its potential returns per unit of risk. Brookfield Renewable Corp is currently generating about -0.08 per unit of risk. If you would invest 377.00 in Altus Power on August 27, 2024 and sell it today you would earn a total of 40.00 from holding Altus Power or generate 10.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Altus Power vs. Brookfield Renewable Corp
Performance |
| Timeline |
| Altus Power |
| Brookfield Renewable Corp |
Altus Power and Brookfield Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altus Power and Brookfield Renewable
The main advantage of trading using opposite Altus Power and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Power 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.| Altus Power vs. Ormat Technologies | Altus Power vs. Enlight Renewable Energy | Altus Power vs. Fluence Energy | Altus Power vs. Renew Energy Global |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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