Correlation Between Brookfield Renewable and ATCO
Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable and ATCO 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 ATCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Renewable Partners and ATCO, you can compare the effects of market volatilities on Brookfield Renewable and ATCO 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 ATCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and ATCO.
Diversification Opportunities for Brookfield Renewable and ATCO
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Brookfield and ATCO is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Partners and ATCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATCO 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 Partners are associated (or correlated) with ATCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATCO has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and ATCO go up and down completely randomly.
Pair Corralation between Brookfield Renewable and ATCO
Assuming the 90 days trading horizon Brookfield Renewable is expected to generate 2.35 times less return on investment than ATCO. In addition to that, Brookfield Renewable is 2.12 times more volatile than ATCO. It trades about 0.01 of its total potential returns per unit of risk. ATCO is currently generating about 0.05 per unit of volatility. If you would invest 3,913 in ATCO on September 28, 2024 and sell it today you would earn a total of 840.00 from holding ATCO or generate 21.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Brookfield Renewable Partners vs. ATCO
Performance |
| Timeline |
| Brookfield Renewable |
| ATCO |
Brookfield Renewable and ATCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Renewable and ATCO
The main advantage of trading using opposite Brookfield Renewable and ATCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Renewable position performs unexpectedly, ATCO 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 ATCO will offset losses from the drop in ATCO's long position.| Brookfield Renewable vs. Brookfield Infrastructure Partners | Brookfield Renewable vs. Algonquin Power Utilities | Brookfield Renewable vs. Northland Power | Brookfield Renewable vs. Fortis Inc |
| ATCO vs. Brookfield Renewable Partners | ATCO vs. Emera Inc | ATCO vs. Fortis Inc | ATCO vs. Algonquin Power Utilities |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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