Correlation Between Clearway Energy and EDP Renovaveis
Can any of the company-specific risk be diversified away by investing in both Clearway Energy and EDP Renovaveis 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 EDP Renovaveis 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 EDP Renovaveis, you can compare the effects of market volatilities on Clearway Energy and EDP Renovaveis 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 EDP Renovaveis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearway Energy and EDP Renovaveis.
Diversification Opportunities for Clearway Energy and EDP Renovaveis
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Clearway and EDP is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Clearway Energy Class and EDP Renovaveis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDP Renovaveis 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 EDP Renovaveis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDP Renovaveis has no effect on the direction of Clearway Energy i.e., Clearway Energy and EDP Renovaveis go up and down completely randomly.
Pair Corralation between Clearway Energy and EDP Renovaveis
Given the investment horizon of 90 days Clearway Energy Class is expected to generate 0.85 times more return on investment than EDP Renovaveis. However, Clearway Energy Class is 1.17 times less risky than EDP Renovaveis. It trades about -0.05 of its potential returns per unit of risk. EDP Renovaveis is currently generating about -0.17 per unit of risk. If you would invest 2,658 in Clearway Energy Class on November 4, 2024 and sell it today you would lose (65.00) from holding Clearway Energy Class or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearway Energy Class vs. EDP Renovaveis
Performance |
| Timeline |
| Clearway Energy Class |
| EDP Renovaveis |
Clearway Energy and EDP Renovaveis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearway Energy and EDP Renovaveis
The main advantage of trading using opposite Clearway Energy and EDP Renovaveis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearway Energy position performs unexpectedly, EDP Renovaveis 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 EDP Renovaveis will offset losses from the drop in EDP Renovaveis' long position.| Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Clearway Energy | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Orsted AS ADR |
| EDP Renovaveis vs. Brookfield Renewable Partners | EDP Renovaveis vs. Clearway Energy Class | EDP Renovaveis vs. Nextera Energy Partners | EDP Renovaveis vs. Algonquin Power Utilities |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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