Correlation Between Brookfield Renewable and SolarBank

Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable and SolarBank 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 SolarBank 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 SolarBank, you can compare the effects of market volatilities on Brookfield Renewable and SolarBank 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 SolarBank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and SolarBank.

Diversification Opportunities for Brookfield Renewable and SolarBank

0.0

Correlation Coefficient

Brookfield Renewable  SolarBank

Pay attention - limited upside

The 3 months correlation between Brookfield and SolarBank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Partners and SolarBank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SolarBank 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 SolarBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SolarBank has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and SolarBank go up and down completely randomly.

Pair Corralation between Brookfield Renewable and SolarBank

If you would invest  650.00  in SolarBank on September 5, 2024 and sell it today you would earn a total of  0.00  from holding SolarBank or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Brookfield Renewable Partners  vs.  SolarBank

Brookfield Renewable

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Partners are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Brookfield Renewable is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

SolarBank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SolarBank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, SolarBank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Brookfield Renewable and SolarBank

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

The idea behind Brookfield Renewable Partners and SolarBank 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.