Correlation Between Brookfield Renewable and First National
Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable and First National 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 First National 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 First National Energy, you can compare the effects of market volatilities on Brookfield Renewable and First National 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 First National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and First National.
Diversification Opportunities for Brookfield Renewable and First National
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Brookfield and First is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Corp and First National Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First National Energy 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 First National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First National Energy has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and First National go up and down completely randomly.
Pair Corralation between Brookfield Renewable and First National
Given the investment horizon of 90 days Brookfield Renewable is expected to generate 13.84 times less return on investment than First National. But when comparing it to its historical volatility, Brookfield Renewable Corp is 7.07 times less risky than First National. It trades about 0.11 of its potential returns per unit of risk. First National Energy is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 4.71 in First National Energy on August 31, 2024 and sell it today you would earn a total of 4.35 from holding First National Energy or generate 92.36% 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. First National Energy
Performance |
| Timeline |
| Brookfield Renewable Corp |
| First National Energy |
Brookfield Renewable and First National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brookfield Renewable and First National
The main advantage of trading using opposite Brookfield Renewable and First National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Renewable position performs unexpectedly, First National 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 First National will offset losses from the drop in First National's long position.| Brookfield Renewable vs. Verde Clean Fuels | Brookfield Renewable vs. Eco Wave Power | Brookfield Renewable vs. Fluence Energy | Brookfield Renewable vs. Advent Technologies Holdings |
| First National vs. Kontrol Technologies Corp | First National vs. PwrCor Inc | First National vs. 808 Renewable Energy | First National vs. Boralex |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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