Correlation Between Nextera Energy and UGE International
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and UGE International 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 UGE International 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 UGE International, you can compare the effects of market volatilities on Nextera Energy and UGE International 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 UGE International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and UGE International.
Diversification Opportunities for Nextera Energy and UGE International
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nextera and UGE is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy Partners and UGE International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UGE International 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 UGE International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UGE International has no effect on the direction of Nextera Energy i.e., Nextera Energy and UGE International go up and down completely randomly.
Pair Corralation between Nextera Energy and UGE International
Considering the 90-day investment horizon Nextera Energy Partners is expected to under-perform the UGE International. But the stock apears to be less risky and, when comparing its historical volatility, Nextera Energy Partners is 5.44 times less risky than UGE International. The stock trades about -0.01 of its potential returns per unit of risk. The UGE International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 96.00 in UGE International on August 24, 2024 and sell it today you would earn a total of 50.00 from holding UGE International or generate 52.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 73.2% |
| Values | Daily Returns |
Nextera Energy Partners vs. UGE International
Performance |
| Timeline |
| Nextera Energy Partners |
| UGE International |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nextera Energy and UGE International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and UGE International
The main advantage of trading using opposite Nextera Energy and UGE International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, UGE International 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 UGE International will offset losses from the drop in UGE International's long position.| Nextera Energy vs. Brookfield Renewable Corp | Nextera Energy vs. Algonquin Power Utilities | Nextera Energy vs. Clearway Energy Class | Nextera Energy vs. Atlantica Sustainable Infrastructure |
| UGE International vs. Fortum Oyj ADR | UGE International vs. Astra Energy | UGE International vs. Powertap Hydrogen Capital | UGE International vs. Brenmiller Energy Ltd |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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