Correlation Between Orsted A/S and Renew Energy
Can any of the company-specific risk be diversified away by investing in both Orsted A/S and Renew 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 Renew 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 Renew Energy Global, you can compare the effects of market volatilities on Orsted A/S and Renew 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 Renew Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted A/S and Renew Energy.
Diversification Opportunities for Orsted A/S and Renew Energy
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Orsted and Renew is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Renew Energy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renew Energy Global 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 Renew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renew Energy Global has no effect on the direction of Orsted A/S i.e., Orsted A/S and Renew Energy go up and down completely randomly.
Pair Corralation between Orsted A/S and Renew Energy
Assuming the 90 days horizon Orsted AS is expected to under-perform the Renew Energy. In addition to that, Orsted A/S is 1.33 times more volatile than Renew Energy Global. It trades about -0.21 of its total potential returns per unit of risk. Renew Energy Global is currently generating about 0.08 per unit of volatility. If you would invest 596.00 in Renew Energy Global on October 26, 2024 and sell it today you would earn a total of 74.00 from holding Renew Energy Global or generate 12.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orsted AS vs. Renew Energy Global
Performance |
| Timeline |
| Orsted A/S |
| Renew Energy Global |
Orsted A/S and Renew Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted A/S and Renew Energy
The main advantage of trading using opposite Orsted A/S and Renew Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted A/S position performs unexpectedly, Renew 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 Renew Energy will offset losses from the drop in Renew 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 |
| Renew Energy vs. Energy Vault Holdings | Renew Energy vs. Fluence Energy | Renew Energy vs. Altus Power | Renew Energy vs. Clearway Energy Class |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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