Correlation Between ReNew Energy and OPAL Fuels
Can any of the company-specific risk be diversified away by investing in both ReNew Energy and OPAL Fuels 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 OPAL Fuels 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 OPAL Fuels, you can compare the effects of market volatilities on ReNew Energy and OPAL Fuels 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 OPAL Fuels. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReNew Energy and OPAL Fuels.
Diversification Opportunities for ReNew Energy and OPAL Fuels
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ReNew and OPAL is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding ReNew Energy Global and OPAL Fuels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPAL Fuels 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 OPAL Fuels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPAL Fuels has no effect on the direction of ReNew Energy i.e., ReNew Energy and OPAL Fuels go up and down completely randomly.
Pair Corralation between ReNew Energy and OPAL Fuels
Assuming the 90 days horizon ReNew Energy Global is expected to generate 7.51 times more return on investment than OPAL Fuels. However, ReNew Energy is 7.51 times more volatile than OPAL Fuels. It trades about 0.07 of its potential returns per unit of risk. OPAL Fuels is currently generating about 0.06 per unit of risk. If you would invest 25.00 in ReNew Energy Global on August 31, 2024 and sell it today you would lose (1.00) from holding ReNew Energy Global or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ReNew Energy Global vs. OPAL Fuels
Performance |
| Timeline |
| ReNew Energy Global |
| OPAL Fuels |
ReNew Energy and OPAL Fuels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ReNew Energy and OPAL Fuels
The main advantage of trading using opposite ReNew Energy and OPAL Fuels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ReNew Energy position performs unexpectedly, OPAL Fuels 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 OPAL Fuels will offset losses from the drop in OPAL Fuels' long position.| ReNew Energy vs. Verde Clean Fuels | ReNew Energy vs. Eco Wave Power | ReNew Energy vs. Fluence Energy | ReNew Energy vs. Advent Technologies Holdings |
| OPAL Fuels vs. Northwest Natural Gas | OPAL Fuels vs. Chesapeake Utilities | OPAL Fuels vs. One Gas | OPAL Fuels vs. NewJersey 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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