Correlation Between ReNew Energy and Talen Energy
Can any of the company-specific risk be diversified away by investing in both ReNew Energy and Talen 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 Talen 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 Talen Energy, you can compare the effects of market volatilities on ReNew Energy and Talen 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 Talen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReNew Energy and Talen Energy.
Diversification Opportunities for ReNew Energy and Talen Energy
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ReNew and Talen is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding ReNew Energy Global and Talen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talen Energy 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 Talen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talen Energy has no effect on the direction of ReNew Energy i.e., ReNew Energy and Talen Energy go up and down completely randomly.
Pair Corralation between ReNew Energy and Talen Energy
Assuming the 90 days horizon ReNew Energy is expected to generate 2.42 times less return on investment than Talen Energy. In addition to that, ReNew Energy is 3.96 times more volatile than Talen Energy. It trades about 0.02 of its total potential returns per unit of risk. Talen Energy is currently generating about 0.18 per unit of volatility. If you would invest 4,650 in Talen Energy on August 27, 2024 and sell it today you would earn a total of 16,770 from holding Talen Energy or generate 360.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 82.2% |
| Values | Daily Returns |
ReNew Energy Global vs. Talen Energy
Performance |
| Timeline |
| ReNew Energy Global |
| Talen Energy |
ReNew Energy and Talen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ReNew Energy and Talen Energy
The main advantage of trading using opposite ReNew Energy and Talen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ReNew Energy position performs unexpectedly, Talen 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 Talen Energy will offset losses from the drop in Talen Energy'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 |
| Talen Energy vs. Afya | Talen Energy vs. Relx PLC ADR | Talen Energy vs. 51Talk Online Education | Talen Energy vs. WEBTOON Entertainment Common |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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