Correlation Between ReNew Energy and American States
Can any of the company-specific risk be diversified away by investing in both ReNew Energy and American States 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 American States 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 American States Water, you can compare the effects of market volatilities on ReNew Energy and American States 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 American States. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReNew Energy and American States.
Diversification Opportunities for ReNew Energy and American States
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ReNew and American is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ReNew Energy Global and American States Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American States Water 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 American States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American States Water has no effect on the direction of ReNew Energy i.e., ReNew Energy and American States go up and down completely randomly.
Pair Corralation between ReNew Energy and American States
Assuming the 90 days horizon ReNew Energy Global is expected to generate 14.61 times more return on investment than American States. However, ReNew Energy is 14.61 times more volatile than American States Water. It trades about 0.12 of its potential returns per unit of risk. American States Water is currently generating about 0.16 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ReNew Energy Global vs. American States Water
Performance |
| Timeline |
| ReNew Energy Global |
| American States Water |
ReNew Energy and American States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ReNew Energy and American States
The main advantage of trading using opposite ReNew Energy and American States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ReNew Energy position performs unexpectedly, American States 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 American States will offset losses from the drop in American States' long position.| ReNew Energy vs. Renew Energy Global | ReNew Energy vs. Xos Equity Warrants | ReNew Energy vs. Microvast Holdings | ReNew Energy vs. AEye Inc |
| American States vs. SJW Group Common | American States vs. The York Water | American States vs. Artesian Resources |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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