Correlation Between Nextera Energy and Alternus Energy
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and Alternus 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 Nextera Energy and Alternus Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextera Energy Partners and Alternus Energy Group, you can compare the effects of market volatilities on Nextera Energy and Alternus 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 Nextera Energy with a short position of Alternus Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Alternus Energy.
Diversification Opportunities for Nextera Energy and Alternus Energy
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nextera and Alternus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy Partners and Alternus Energy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternus Energy Group and Nextera 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 Nextera Energy Partners are associated (or correlated) with Alternus Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternus Energy Group has no effect on the direction of Nextera Energy i.e., Nextera Energy and Alternus Energy go up and down completely randomly.
Pair Corralation between Nextera Energy and Alternus Energy
Considering the 90-day investment horizon Nextera Energy Partners is expected to generate 0.49 times more return on investment than Alternus Energy. However, Nextera Energy Partners is 2.06 times less risky than Alternus Energy. It trades about -0.13 of its potential returns per unit of risk. Alternus Energy Group is currently generating about -0.32 per unit of risk. If you would invest 2,362 in Nextera Energy Partners on August 31, 2024 and sell it today you would lose (615.00) from holding Nextera Energy Partners or give up 26.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextera Energy Partners vs. Alternus Energy Group
Performance |
| Timeline |
| Nextera Energy Partners |
| Alternus Energy Group |
Nextera Energy and Alternus Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and Alternus Energy
The main advantage of trading using opposite Nextera Energy and Alternus Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, Alternus 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 Alternus Energy will offset losses from the drop in Alternus Energy's long position.| Nextera Energy vs. Atlantica Sustainable Infrastructure | Nextera Energy vs. Verde Clean Fuels | Nextera Energy vs. Ellomay Capital | Nextera Energy vs. Eco Wave Power |
| Alternus Energy vs. Atlantica Sustainable Infrastructure | Alternus Energy vs. Verde Clean Fuels | Alternus Energy vs. Ellomay Capital | Alternus Energy vs. Eco Wave Power |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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