Correlation Between Orsted A/S and Clearway Energy
Can any of the company-specific risk be diversified away by investing in both Orsted A/S and Clearway 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 Orsted A/S and Clearway Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and Clearway Energy, you can compare the effects of market volatilities on Orsted A/S and Clearway 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 Orsted A/S with a short position of Clearway Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted A/S and Clearway Energy.
Diversification Opportunities for Orsted A/S and Clearway Energy
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Orsted and Clearway is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Clearway Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway Energy 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 Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy has no effect on the direction of Orsted A/S i.e., Orsted A/S and Clearway Energy go up and down completely randomly.
Pair Corralation between Orsted A/S and Clearway Energy
Assuming the 90 days horizon Orsted AS is expected to under-perform the Clearway Energy. In addition to that, Orsted A/S is 1.57 times more volatile than Clearway Energy. It trades about -0.11 of its total potential returns per unit of risk. Clearway Energy is currently generating about 0.17 per unit of volatility. If you would invest 2,444 in Clearway Energy on August 28, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orsted AS vs. Clearway Energy
Performance |
| Timeline |
| Orsted A/S |
| Clearway Energy |
Orsted A/S and Clearway Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted A/S and Clearway Energy
The main advantage of trading using opposite Orsted A/S and Clearway Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted A/S position performs unexpectedly, Clearway 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 Clearway Energy will offset losses from the drop in Clearway Energy'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 |
| Clearway Energy vs. Atlantica Sustainable Infrastructure | Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Brookfield Renewable Partners |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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