Correlation Between Brookfield Renewable and Fortis Pref
Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable and Fortis Pref 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 Brookfield Renewable and Fortis Pref into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Renewable Energy and Fortis Pref M, you can compare the effects of market volatilities on Brookfield Renewable and Fortis Pref 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 Brookfield Renewable with a short position of Fortis Pref. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and Fortis Pref.
Diversification Opportunities for Brookfield Renewable and Fortis Pref
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brookfield and Fortis is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Energy and Fortis Pref M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortis Pref M and Brookfield Renewable 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 Brookfield Renewable Energy are associated (or correlated) with Fortis Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortis Pref M has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and Fortis Pref go up and down completely randomly.
Pair Corralation between Brookfield Renewable and Fortis Pref
Assuming the 90 days trading horizon Brookfield Renewable is expected to generate 1.28 times less return on investment than Fortis Pref. But when comparing it to its historical volatility, Brookfield Renewable Energy is 1.14 times less risky than Fortis Pref. It trades about 0.23 of its potential returns per unit of risk. Fortis Pref M is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,026 in Fortis Pref M on September 14, 2024 and sell it today you would earn a total of 74.00 from holding Fortis Pref M or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Renewable Energy vs. Fortis Pref M
Performance |
| Timeline |
| Brookfield Renewable |
| Fortis Pref M |
Brookfield Renewable and Fortis Pref Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Renewable and Fortis Pref
The main advantage of trading using opposite Brookfield Renewable and Fortis Pref positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Renewable position performs unexpectedly, Fortis Pref 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 Fortis Pref will offset losses from the drop in Fortis Pref's long position.| Brookfield Renewable vs. Sparx Technology | Brookfield Renewable vs. Constellation Software | Brookfield Renewable vs. Canlan Ice Sports | Brookfield Renewable vs. Ramp Metals |
| Fortis Pref vs. Microsoft Corp CDR | Fortis Pref vs. Apple Inc CDR | Fortis Pref vs. Alphabet Inc CDR | Fortis Pref vs. Amazon CDR |
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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