Correlation Between Orsted A/S and Brookfield Renewable
Can any of the company-specific risk be diversified away by investing in both Orsted A/S and Brookfield Renewable 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 Orsted A/S and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and Brookfield Renewable Partners, you can compare the effects of market volatilities on Orsted A/S and Brookfield Renewable 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 Orsted A/S with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted A/S and Brookfield Renewable.
Diversification Opportunities for Orsted A/S and Brookfield Renewable
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Orsted and Brookfield is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Orsted A/S 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 Orsted AS are associated (or correlated) with Brookfield Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Renewable has no effect on the direction of Orsted A/S i.e., Orsted A/S and Brookfield Renewable go up and down completely randomly.
Pair Corralation between Orsted A/S and Brookfield Renewable
Assuming the 90 days horizon Orsted AS is expected to under-perform the Brookfield Renewable. In addition to that, Orsted A/S is 1.95 times more volatile than Brookfield Renewable Partners. It trades about -0.12 of its total potential returns per unit of risk. Brookfield Renewable Partners is currently generating about -0.14 per unit of volatility. If you would invest 2,721 in Brookfield Renewable Partners on August 27, 2024 and sell it today you would lose (204.00) from holding Brookfield Renewable Partners or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orsted AS vs. Brookfield Renewable Partners
Performance |
| Timeline |
| Orsted A/S |
| Brookfield Renewable |
Orsted A/S and Brookfield Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted A/S and Brookfield Renewable
The main advantage of trading using opposite Orsted A/S and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted A/S position performs unexpectedly, Brookfield Renewable 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 Brookfield Renewable will offset losses from the drop in Brookfield Renewable's long position.| Orsted A/S vs. Innergex Renewable Energy | Orsted A/S vs. Clearway Energy | Orsted A/S vs. Fusion Fuel Green | Orsted A/S vs. Powertap Hydrogen Capital |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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