Correlation Between ReNew Energy and Cadiz Depositary
Can any of the company-specific risk be diversified away by investing in both ReNew Energy and Cadiz Depositary 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 Cadiz Depositary 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 Cadiz Depositary Shares, you can compare the effects of market volatilities on ReNew Energy and Cadiz Depositary 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 Cadiz Depositary. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReNew Energy and Cadiz Depositary.
Diversification Opportunities for ReNew Energy and Cadiz Depositary
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ReNew and Cadiz is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding ReNew Energy Global and Cadiz Depositary Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cadiz Depositary Shares 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 Cadiz Depositary. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cadiz Depositary Shares has no effect on the direction of ReNew Energy i.e., ReNew Energy and Cadiz Depositary go up and down completely randomly.
Pair Corralation between ReNew Energy and Cadiz Depositary
Assuming the 90 days horizon ReNew Energy Global is expected to generate 4.93 times more return on investment than Cadiz Depositary. However, ReNew Energy is 4.93 times more volatile than Cadiz Depositary Shares. It trades about 0.02 of its potential returns per unit of risk. Cadiz Depositary Shares is currently generating about 0.03 per unit of risk. If you would invest 80.00 in ReNew Energy Global on August 27, 2024 and sell it today you would lose (53.00) from holding ReNew Energy Global or give up 66.25% 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. Cadiz Depositary Shares
Performance |
| Timeline |
| ReNew Energy Global |
| Cadiz Depositary Shares |
ReNew Energy and Cadiz Depositary Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ReNew Energy and Cadiz Depositary
The main advantage of trading using opposite ReNew Energy and Cadiz Depositary positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ReNew Energy position performs unexpectedly, Cadiz Depositary 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 Cadiz Depositary will offset losses from the drop in Cadiz Depositary's long position.| ReNew Energy vs. Renew Energy Global | ReNew Energy vs. Xos Equity Warrants | ReNew Energy vs. Microvast Holdings | ReNew Energy vs. AEye Inc |
| Cadiz Depositary vs. Atlanticus Holdings Corp | Cadiz Depositary vs. LifeMD Preferred Series | Cadiz Depositary vs. Aquagold International | Cadiz Depositary vs. Morningstar Unconstrained Allocation |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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