Correlation Between Atlantica Sustainable and Brookfield Renewable
Can any of the company-specific risk be diversified away by investing in both Atlantica Sustainable 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 Atlantica Sustainable and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Atlantica Sustainable Infrastructure and Brookfield Renewable Corp, you can compare the effects of market volatilities on Atlantica Sustainable 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 Atlantica Sustainable with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and Brookfield Renewable.
Diversification Opportunities for Atlantica Sustainable and Brookfield Renewable
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Atlantica and Brookfield is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr 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 Atlantica Sustainable 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 Atlantica Sustainable Infrastructure 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 Atlantica Sustainable i.e., Atlantica Sustainable and Brookfield Renewable go up and down completely randomly.
Pair Corralation between Atlantica Sustainable and Brookfield Renewable
Allowing for the 90-day total investment horizon Atlantica Sustainable is expected to generate 1.39 times less return on investment than Brookfield Renewable. But when comparing it to its historical volatility, Atlantica Sustainable Infrastructure is 11.7 times less risky than Brookfield Renewable. It trades about 0.15 of its potential returns per unit of risk. Brookfield Renewable Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,113 in Brookfield Renewable Corp on August 24, 2024 and sell it today you would earn a total of 64.00 from holding Brookfield Renewable Corp or generate 2.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlantica Sustainable Infrastr vs. Brookfield Renewable Corp
Performance |
| Timeline |
| Atlantica Sustainable |
| Brookfield Renewable Corp |
Atlantica Sustainable and Brookfield Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlantica Sustainable and Brookfield Renewable
The main advantage of trading using opposite Atlantica Sustainable and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantica Sustainable 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.| Atlantica Sustainable vs. Clearway Energy | Atlantica Sustainable vs. Brookfield Renewable Corp | Atlantica Sustainable vs. Nextera Energy Partners | Atlantica Sustainable vs. Brookfield Renewable Partners |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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