Correlation Between Renew Energy and Orsted A/S
Can any of the company-specific risk be diversified away by investing in both Renew 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 Renew 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 Renew Energy Global and Orsted AS, you can compare the effects of market volatilities on Renew 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 Renew Energy with a short position of Orsted A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renew Energy and Orsted A/S.
Diversification Opportunities for Renew Energy and Orsted A/S
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Renew and Orsted is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Renew Energy Global and Orsted AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orsted A/S and Renew 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 Renew Energy Global 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 Renew Energy i.e., Renew Energy and Orsted A/S go up and down completely randomly.
Pair Corralation between Renew Energy and Orsted A/S
Considering the 90-day investment horizon Renew Energy Global is expected to generate 0.29 times more return on investment than Orsted A/S. However, Renew Energy Global is 3.47 times less risky than Orsted A/S. It trades about -0.24 of its potential returns per unit of risk. Orsted AS is currently generating about -0.21 per unit of risk. If you would invest 686.00 in Renew Energy Global on November 5, 2024 and sell it today you would lose (38.00) from holding Renew Energy Global or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renew Energy Global vs. Orsted AS
Performance |
| Timeline |
| Renew Energy Global |
| Orsted A/S |
Renew Energy and Orsted A/S Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renew Energy and Orsted A/S
The main advantage of trading using opposite Renew Energy and Orsted A/S positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renew 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.| Renew Energy vs. Energy Vault Holdings | Renew Energy vs. Fluence Energy | Renew Energy vs. Altus Power | Renew Energy vs. Clearway Energy Class |
| 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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