Correlation Between NRG Energy and ATRenew
Can any of the company-specific risk be diversified away by investing in both NRG Energy and ATRenew 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 ATRenew into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NRG Energy and ATRenew Inc DRC, you can compare the effects of market volatilities on NRG Energy and ATRenew 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 ATRenew. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and ATRenew.
Diversification Opportunities for NRG Energy and ATRenew
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NRG and ATRenew is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and ATRenew Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRenew Inc DRC 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 ATRenew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRenew Inc DRC has no effect on the direction of NRG Energy i.e., NRG Energy and ATRenew go up and down completely randomly.
Pair Corralation between NRG Energy and ATRenew
Considering the 90-day investment horizon NRG Energy is expected to generate 1.6 times less return on investment than ATRenew. But when comparing it to its historical volatility, NRG Energy is 2.18 times less risky than ATRenew. It trades about 0.15 of its potential returns per unit of risk. ATRenew Inc DRC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 120.00 in ATRenew Inc DRC on August 23, 2024 and sell it today you would earn a total of 160.00 from holding ATRenew Inc DRC or generate 133.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NRG Energy vs. ATRenew Inc DRC
Performance |
| Timeline |
| NRG Energy |
| ATRenew Inc DRC |
NRG Energy and ATRenew Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NRG Energy and ATRenew
The main advantage of trading using opposite NRG Energy and ATRenew positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NRG Energy position performs unexpectedly, ATRenew 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 ATRenew will offset losses from the drop in ATRenew's long position.| NRG Energy vs. TransAlta Corp | NRG Energy vs. Kenon Holdings | NRG Energy vs. Pampa Energia SA | NRG Energy vs. AGL Energy |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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