Correlation Between Renew Energy and ReNew Energy
Can any of the company-specific risk be diversified away by investing in both Renew Energy and ReNew Energy 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 ReNew Energy 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 ReNew Energy Global, you can compare the effects of market volatilities on Renew Energy and ReNew Energy 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 ReNew Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renew Energy and ReNew Energy.
Diversification Opportunities for Renew Energy and ReNew Energy
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Renew and ReNew is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Renew Energy Global and ReNew Energy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReNew Energy Global 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 ReNew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReNew Energy Global has no effect on the direction of Renew Energy i.e., Renew Energy and ReNew Energy go up and down completely randomly.
Pair Corralation between Renew Energy and ReNew Energy
Considering the 90-day investment horizon Renew Energy is expected to generate 7.3 times less return on investment than ReNew Energy. But when comparing it to its historical volatility, Renew Energy Global is 7.09 times less risky than ReNew Energy. It trades about 0.11 of its potential returns per unit of risk. ReNew Energy Global is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 25.00 in ReNew Energy Global on August 30, 2024 and sell it today you would earn a total of 4.00 from holding ReNew Energy Global or generate 16.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Renew Energy Global vs. ReNew Energy Global
Performance |
| Timeline |
| Renew Energy Global |
| ReNew Energy Global |
Renew Energy and ReNew Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Renew Energy and ReNew Energy
The main advantage of trading using opposite Renew Energy and ReNew Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renew Energy position performs unexpectedly, ReNew Energy 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 ReNew Energy will offset losses from the drop in ReNew Energy's long position.| Renew Energy vs. Energy Vault Holdings | Renew Energy vs. Fluence Energy | Renew Energy vs. Altus Power | Renew Energy vs. Atlantica Sustainable Infrastructure |
| ReNew Energy vs. Renew Energy Global | ReNew Energy vs. Xos Equity Warrants | ReNew Energy vs. Microvast Holdings | ReNew Energy vs. AEye Inc |
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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