Correlation Between Clearway Energy and Orsted A/S
Can any of the company-specific risk be diversified away by investing in both Clearway Energy and Orsted A/S 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 Orsted A/S into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearway Energy Class and Orsted AS ADR, you can compare the effects of market volatilities on Clearway Energy and Orsted A/S 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 Orsted A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearway Energy and Orsted A/S.
Diversification Opportunities for Clearway Energy and Orsted A/S
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Clearway and Orsted is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Clearway Energy Class and Orsted AS ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted AS ADR 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 Class are associated (or correlated) with Orsted A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted AS ADR has no effect on the direction of Clearway Energy i.e., Clearway Energy and Orsted A/S go up and down completely randomly.
Pair Corralation between Clearway Energy and Orsted A/S
Given the investment horizon of 90 days Clearway Energy Class is expected to generate 0.81 times more return on investment than Orsted A/S. However, Clearway Energy Class is 1.23 times less risky than Orsted A/S. It trades about 0.09 of its potential returns per unit of risk. Orsted AS ADR is currently generating about -0.16 per unit of risk. If you would invest 2,698 in Clearway Energy Class on August 24, 2024 and sell it today you would earn a total of 137.00 from holding Clearway Energy Class or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Clearway Energy Class vs. Orsted AS ADR
Performance |
| Timeline |
| Clearway Energy Class |
| Orsted AS ADR |
Clearway Energy and Orsted A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearway Energy and Orsted A/S
The main advantage of trading using opposite Clearway Energy and Orsted A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearway Energy position performs unexpectedly, Orsted A/S 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 Orsted A/S will offset losses from the drop in Orsted A/S's long position.| Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Clearway Energy | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Atlantica Sustainable Infrastructure |
| Orsted A/S vs. Brookfield Renewable Partners | Orsted A/S vs. Brookfield Renewable Corp | Orsted A/S vs. Clearway Energy Class | Orsted A/S vs. Atlantica Sustainable Infrastructure |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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