Correlation Between Clearway Energy and AGL Energy
Can any of the company-specific risk be diversified away by investing in both Clearway Energy and AGL Energy 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 Clearway Energy and AGL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearway Energy and AGL Energy, you can compare the effects of market volatilities on Clearway Energy and AGL Energy 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 Clearway Energy with a short position of AGL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearway Energy and AGL Energy.
Diversification Opportunities for Clearway Energy and AGL Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clearway and AGL is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Clearway Energy and AGL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGL Energy and Clearway Energy 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 Clearway Energy are associated (or correlated) with AGL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGL Energy has no effect on the direction of Clearway Energy i.e., Clearway Energy and AGL Energy go up and down completely randomly.
Pair Corralation between Clearway Energy and AGL Energy
Assuming the 90 days trading horizon Clearway Energy is expected to generate 0.86 times more return on investment than AGL Energy. However, Clearway Energy is 1.16 times less risky than AGL Energy. It trades about 0.17 of its potential returns per unit of risk. AGL Energy is currently generating about -0.1 per unit of risk. If you would invest 2,444 in Clearway Energy on August 27, 2024 and sell it today you would earn a total of 256.00 from holding Clearway Energy or generate 10.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearway Energy vs. AGL Energy
Performance |
| Timeline |
| Clearway Energy |
| AGL Energy |
Clearway Energy and AGL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearway Energy and AGL Energy
The main advantage of trading using opposite Clearway Energy and AGL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearway Energy position performs unexpectedly, AGL Energy 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 AGL Energy will offset losses from the drop in AGL Energy's long position.| Clearway Energy vs. Atlantica Sustainable Infrastructure | Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Brookfield Renewable Partners |
| AGL Energy vs. NRG Energy | AGL Energy vs. TransAlta Corp | AGL Energy vs. Kenon Holdings | AGL Energy vs. Pampa Energia SA |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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