Correlation Between Nextera Energy and Orsted A/S
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and Orsted A/S 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 Orsted A/S 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 Orsted AS, you can compare the effects of market volatilities on Nextera Energy and Orsted A/S 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 Orsted A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Orsted A/S.
Diversification Opportunities for Nextera Energy and Orsted A/S
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nextera and Orsted is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy Partners and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted A/S 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 Orsted A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orsted A/S has no effect on the direction of Nextera Energy i.e., Nextera Energy and Orsted A/S go up and down completely randomly.
Pair Corralation between Nextera Energy and Orsted A/S
Considering the 90-day investment horizon Nextera Energy Partners is expected to under-perform the Orsted A/S. In addition to that, Nextera Energy is 1.52 times more volatile than Orsted AS. It trades about -0.42 of its total potential returns per unit of risk. Orsted AS is currently generating about -0.21 per unit of volatility. If you would invest 4,692 in Orsted AS on November 5, 2024 and sell it today you would lose (797.00) from holding Orsted AS or give up 16.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextera Energy Partners vs. Orsted AS
Performance |
| Timeline |
| Nextera Energy Partners |
| Orsted A/S |
Nextera Energy and Orsted A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and Orsted A/S
The main advantage of trading using opposite Nextera Energy and Orsted A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, Orsted A/S 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 Orsted A/S will offset losses from the drop in Orsted A/S's long position.| Nextera Energy vs. Brookfield Renewable Corp | Nextera Energy vs. Algonquin Power Utilities | Nextera Energy vs. Clearway Energy Class | Nextera Energy vs. Clearway Energy |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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