Correlation Between Fortum Oyj and Brenmiller Energy
Can any of the company-specific risk be diversified away by investing in both Fortum Oyj and Brenmiller 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 Fortum Oyj and Brenmiller Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortum Oyj ADR and Brenmiller Energy Ltd, you can compare the effects of market volatilities on Fortum Oyj and Brenmiller 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 Fortum Oyj with a short position of Brenmiller Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortum Oyj and Brenmiller Energy.
Diversification Opportunities for Fortum Oyj and Brenmiller Energy
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fortum and Brenmiller is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Fortum Oyj ADR and Brenmiller Energy Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brenmiller Energy and Fortum Oyj 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 Fortum Oyj ADR are associated (or correlated) with Brenmiller Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brenmiller Energy has no effect on the direction of Fortum Oyj i.e., Fortum Oyj and Brenmiller Energy go up and down completely randomly.
Pair Corralation between Fortum Oyj and Brenmiller Energy
Assuming the 90 days horizon Fortum Oyj ADR is expected to generate 0.17 times more return on investment than Brenmiller Energy. However, Fortum Oyj ADR is 5.84 times less risky than Brenmiller Energy. It trades about 0.08 of its potential returns per unit of risk. Brenmiller Energy Ltd is currently generating about -0.03 per unit of risk. If you would invest 228.00 in Fortum Oyj ADR on August 27, 2024 and sell it today you would earn a total of 68.00 from holding Fortum Oyj ADR or generate 29.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortum Oyj ADR vs. Brenmiller Energy Ltd
Performance |
| Timeline |
| Fortum Oyj ADR |
| Brenmiller Energy |
Fortum Oyj and Brenmiller Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortum Oyj and Brenmiller Energy
The main advantage of trading using opposite Fortum Oyj and Brenmiller Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortum Oyj position performs unexpectedly, Brenmiller 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 Brenmiller Energy will offset losses from the drop in Brenmiller Energy's long position.The idea behind Fortum Oyj ADR and Brenmiller Energy Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Brenmiller Energy vs. Fusion Fuel Green | Brenmiller Energy vs. Advent Technologies Holdings | Brenmiller Energy vs. Eos Energy Enterprises | Brenmiller Energy vs. CuriosityStream |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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