Correlation Between NRG Energy and KinderCare Learning
Can any of the company-specific risk be diversified away by investing in both NRG Energy and KinderCare Learning 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 NRG Energy and KinderCare Learning into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and KinderCare Learning Companies,, you can compare the effects of market volatilities on NRG Energy and KinderCare Learning 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 NRG Energy with a short position of KinderCare Learning. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and KinderCare Learning.
Diversification Opportunities for NRG Energy and KinderCare Learning
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NRG and KinderCare is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and KinderCare Learning Companies, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KinderCare Learning and NRG 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 NRG Energy are associated (or correlated) with KinderCare Learning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KinderCare Learning has no effect on the direction of NRG Energy i.e., NRG Energy and KinderCare Learning go up and down completely randomly.
Pair Corralation between NRG Energy and KinderCare Learning
Considering the 90-day investment horizon NRG Energy is expected to generate 0.58 times more return on investment than KinderCare Learning. However, NRG Energy is 1.73 times less risky than KinderCare Learning. It trades about 0.25 of its potential returns per unit of risk. KinderCare Learning Companies, is currently generating about -0.15 per unit of risk. If you would invest 8,805 in NRG Energy on September 3, 2024 and sell it today you would earn a total of 1,356 from holding NRG Energy or generate 15.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. KinderCare Learning Companies,
Performance |
| Timeline |
| NRG Energy |
| KinderCare Learning |
NRG Energy and KinderCare Learning Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and KinderCare Learning
The main advantage of trading using opposite NRG Energy and KinderCare Learning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, KinderCare Learning 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 KinderCare Learning will offset losses from the drop in KinderCare Learning's long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
| KinderCare Learning vs. Saia Inc | KinderCare Learning vs. Tianjin Capital Environmental | KinderCare Learning vs. Olympic Steel | KinderCare Learning vs. Lion One Metals |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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