Correlation Between Brookfield Renewable and Boralex
Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable and Boralex 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 Boralex into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brookfield Renewable Corp and Boralex, you can compare the effects of market volatilities on Brookfield Renewable and Boralex 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 Boralex. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and Boralex.
Diversification Opportunities for Brookfield Renewable and Boralex
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Brookfield and Boralex is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Corp and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex 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 Corp are associated (or correlated) with Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and Boralex go up and down completely randomly.
Pair Corralation between Brookfield Renewable and Boralex
Assuming the 90 days trading horizon Brookfield Renewable Corp is expected to generate 1.39 times more return on investment than Boralex. However, Brookfield Renewable is 1.39 times more volatile than Boralex. It trades about 0.13 of its potential returns per unit of risk. Boralex is currently generating about -0.25 per unit of risk. If you would invest 4,286 in Brookfield Renewable Corp on August 31, 2024 and sell it today you would earn a total of 303.00 from holding Brookfield Renewable Corp or generate 7.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Brookfield Renewable Corp vs. Boralex
Performance |
| Timeline |
| Brookfield Renewable Corp |
| Boralex |
Brookfield Renewable and Boralex Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Renewable and Boralex
The main advantage of trading using opposite Brookfield Renewable and Boralex positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Renewable position performs unexpectedly, Boralex 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 Boralex will offset losses from the drop in Boralex's long position.| Brookfield Renewable vs. Caldwell Partners International | Brookfield Renewable vs. Chesswood Group Limited | Brookfield Renewable vs. Forstrong Global Income | Brookfield Renewable vs. BMO Aggregate Bond |
| Boralex vs. Innergex Renewable Energy | Boralex vs. Northland Power | Boralex vs. Capital Power | Boralex 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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