Correlation Between Atlantica Sustainable and FirstEnergy
Can any of the company-specific risk be diversified away by investing in both Atlantica Sustainable and FirstEnergy 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 FirstEnergy 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 FirstEnergy, you can compare the effects of market volatilities on Atlantica Sustainable and FirstEnergy 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 FirstEnergy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Atlantica Sustainable and FirstEnergy.
Diversification Opportunities for Atlantica Sustainable and FirstEnergy
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Atlantica and FirstEnergy is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Atlantica Sustainable Infrastr and FirstEnergy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstEnergy 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 FirstEnergy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstEnergy has no effect on the direction of Atlantica Sustainable i.e., Atlantica Sustainable and FirstEnergy go up and down completely randomly.
Pair Corralation between Atlantica Sustainable and FirstEnergy
Allowing for the 90-day total investment horizon Atlantica Sustainable Infrastructure is expected to generate 1.53 times more return on investment than FirstEnergy. However, Atlantica Sustainable is 1.53 times more volatile than FirstEnergy. It trades about 0.06 of its potential returns per unit of risk. FirstEnergy is currently generating about 0.07 per unit of risk. If you would invest 1,783 in Atlantica Sustainable Infrastructure on August 26, 2024 and sell it today you would earn a total of 430.00 from holding Atlantica Sustainable Infrastructure or generate 24.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Atlantica Sustainable Infrastr vs. FirstEnergy
Performance |
| Timeline |
| Atlantica Sustainable |
| FirstEnergy |
Atlantica Sustainable and FirstEnergy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Atlantica Sustainable and FirstEnergy
The main advantage of trading using opposite Atlantica Sustainable and FirstEnergy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atlantica Sustainable position performs unexpectedly, FirstEnergy 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 FirstEnergy will offset losses from the drop in FirstEnergy'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 |
| FirstEnergy vs. CenterPoint Energy | FirstEnergy vs. Pinnacle West Capital | FirstEnergy vs. Edison International | FirstEnergy vs. Public Service Enterprise |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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