Correlation Between Nextera Energy and Eco Wave
Can any of the company-specific risk be diversified away by investing in both Nextera Energy and Eco Wave 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 Eco Wave 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 Eco Wave Power, you can compare the effects of market volatilities on Nextera Energy and Eco Wave 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 Eco Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextera Energy and Eco Wave.
Diversification Opportunities for Nextera Energy and Eco Wave
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nextera and Eco is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nextera Energy Partners and Eco Wave Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco Wave Power 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 Eco Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco Wave Power has no effect on the direction of Nextera Energy i.e., Nextera Energy and Eco Wave go up and down completely randomly.
Pair Corralation between Nextera Energy and Eco Wave
Considering the 90-day investment horizon Nextera Energy Partners is expected to under-perform the Eco Wave. In addition to that, Nextera Energy is 2.15 times more volatile than Eco Wave Power. It trades about -0.57 of its total potential returns per unit of risk. Eco Wave Power is currently generating about -0.04 per unit of volatility. If you would invest 886.00 in Eco Wave Power on November 28, 2024 and sell it today you would lose (60.00) from holding Eco Wave Power or give up 6.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 27.27% |
| Values | Daily Returns |
Nextera Energy Partners vs. Eco Wave Power
Performance |
| Timeline |
| Nextera Energy Partners |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Eco Wave Power |
Nextera Energy and Eco Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextera Energy and Eco Wave
The main advantage of trading using opposite Nextera Energy and Eco Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextera Energy position performs unexpectedly, Eco Wave 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 Eco Wave will offset losses from the drop in Eco Wave'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 |
| Eco Wave vs. Alternus Energy Group | Eco Wave vs. Triad Pro Innovators | Eco Wave vs. American Security Resources | Eco Wave vs. Verde Clean Fuels |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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