Correlation Between Brookfield Renewable and Excelerate Energy

Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable and Excelerate 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 Brookfield Renewable and Excelerate Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brookfield Renewable Partners and Excelerate Energy, you can compare the effects of market volatilities on Brookfield Renewable and Excelerate 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 Brookfield Renewable with a short position of Excelerate Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and Excelerate Energy.

Diversification Opportunities for Brookfield Renewable and Excelerate Energy

-0.75

Correlation Coefficient

Brookfield Renewable  Excelerate Energy

Pay attention - limited upside

The 3 months correlation between Brookfield and Excelerate is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Partners and Excelerate Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Excelerate Energy and Brookfield Renewable 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 Brookfield Renewable Partners are associated (or correlated) with Excelerate Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Excelerate Energy has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and Excelerate Energy go up and down completely randomly.

Pair Corralation between Brookfield Renewable and Excelerate Energy

Considering the 90-day investment horizon Brookfield Renewable Partners is expected to under-perform the Excelerate Energy. But the stock apears to be less risky and, when comparing its historical volatility, Brookfield Renewable Partners is 1.51 times less risky than Excelerate Energy. The stock trades about -0.18 of its potential returns per unit of risk. The Excelerate Energy is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,055  in Excelerate Energy on October 15, 2024 and sell it today you would lose (82.00) from holding Excelerate Energy or give up 2.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Brookfield Renewable Partners  vs.  Excelerate Energy

Brookfield Renewable

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brookfield Renewable Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Excelerate Energy

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Excelerate Energy are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Excelerate Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Brookfield Renewable and Excelerate Energy

The main advantage of trading using opposite Brookfield Renewable and Excelerate Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brookfield Renewable position performs unexpectedly, Excelerate 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 Excelerate Energy will offset losses from the drop in Excelerate Energy's long position.

The idea behind Brookfield Renewable Partners and Excelerate Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.