Correlation Between Brookfield Renewable and Advent Technologies
Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable and Advent Technologies 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 Advent Technologies 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 Advent Technologies Holdings, you can compare the effects of market volatilities on Brookfield Renewable and Advent Technologies 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 Advent Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and Advent Technologies.
Diversification Opportunities for Brookfield Renewable and Advent Technologies
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brookfield and Advent is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Corp and Advent Technologies Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advent Technologies 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 Advent Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advent Technologies has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and Advent Technologies go up and down completely randomly.
Pair Corralation between Brookfield Renewable and Advent Technologies
Given the investment horizon of 90 days Brookfield Renewable Corp is expected to under-perform the Advent Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Renewable Corp is 4.43 times less risky than Advent Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Advent Technologies Holdings is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 0.98 in Advent Technologies Holdings on August 27, 2024 and sell it today you would earn a total of 0.14 from holding Advent Technologies Holdings or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Brookfield Renewable Corp vs. Advent Technologies Holdings
Performance |
| Timeline |
| Brookfield Renewable Corp |
| Advent Technologies |
Brookfield Renewable and Advent Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Renewable and Advent Technologies
The main advantage of trading using opposite Brookfield Renewable and Advent Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Renewable position performs unexpectedly, Advent Technologies 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 Advent Technologies will offset losses from the drop in Advent Technologies' long position.The idea behind Brookfield Renewable Corp and Advent Technologies Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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