Correlation Between Clearway Energy and TransAlta Corp
Can any of the company-specific risk be diversified away by investing in both Clearway Energy and TransAlta Corp 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 TransAlta Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearway Energy and TransAlta Corp, you can compare the effects of market volatilities on Clearway Energy and TransAlta Corp 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 TransAlta Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearway Energy and TransAlta Corp.
Diversification Opportunities for Clearway Energy and TransAlta Corp
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Clearway and TransAlta is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Clearway Energy and TransAlta Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAlta Corp 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 TransAlta Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAlta Corp has no effect on the direction of Clearway Energy i.e., Clearway Energy and TransAlta Corp go up and down completely randomly.
Pair Corralation between Clearway Energy and TransAlta Corp
Assuming the 90 days trading horizon Clearway Energy is expected to generate 0.29 times more return on investment than TransAlta Corp. However, Clearway Energy is 3.42 times less risky than TransAlta Corp. It trades about -0.02 of its potential returns per unit of risk. TransAlta Corp is currently generating about -0.27 per unit of risk. If you would invest 2,485 in Clearway Energy on November 18, 2024 and sell it today you would lose (23.00) from holding Clearway Energy or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearway Energy vs. TransAlta Corp
Performance |
| Timeline |
| Clearway Energy |
| TransAlta Corp |
Clearway Energy and TransAlta Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearway Energy and TransAlta Corp
The main advantage of trading using opposite Clearway Energy and TransAlta Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearway Energy position performs unexpectedly, TransAlta Corp 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 TransAlta Corp will offset losses from the drop in TransAlta Corp's long position.| Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Brookfield Renewable Partners | Clearway Energy vs. Clearway Energy Class | Clearway Energy vs. Orsted AS |
| TransAlta Corp vs. Pampa Energia SA | TransAlta Corp vs. Vistra Energy Corp | TransAlta Corp vs. NRG Energy | TransAlta Corp vs. Power Assets Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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