Correlation Between Altus Power and Clearway Energy
Can any of the company-specific risk be diversified away by investing in both Altus Power and Clearway Energy 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 Clearway Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Altus Power and Clearway Energy Class, you can compare the effects of market volatilities on Altus Power and Clearway Energy 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 Clearway Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altus Power and Clearway Energy.
Diversification Opportunities for Altus Power and Clearway Energy
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Altus and Clearway is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Altus Power and Clearway Energy Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway Energy Class 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 Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy Class has no effect on the direction of Altus Power i.e., Altus Power and Clearway Energy go up and down completely randomly.
Pair Corralation between Altus Power and Clearway Energy
Given the investment horizon of 90 days Altus Power is expected to generate 1.44 times less return on investment than Clearway Energy. In addition to that, Altus Power is 2.58 times more volatile than Clearway Energy Class. It trades about 0.01 of its total potential returns per unit of risk. Clearway Energy Class is currently generating about 0.05 per unit of volatility. If you would invest 2,366 in Clearway Energy Class on August 24, 2024 and sell it today you would earn a total of 469.00 from holding Clearway Energy Class or generate 19.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Altus Power vs. Clearway Energy Class
Performance |
| Timeline |
| Altus Power |
| Clearway Energy Class |
Altus Power and Clearway Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Altus Power and Clearway Energy
The main advantage of trading using opposite Altus Power and Clearway Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altus Power position performs unexpectedly, Clearway Energy 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 Clearway Energy will offset losses from the drop in Clearway Energy'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 |
| Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Clearway Energy | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Atlantica Sustainable Infrastructure |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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