Correlation Between Clearway Energy and Ellomay Capital

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

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

Diversification Opportunities for Clearway Energy and Ellomay Capital

-0.47

Correlation Coefficient

Clearway Energy  Ellomay Capital

Very good diversification

The 3 months correlation between Clearway and Ellomay is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Clearway Energy Class and Ellomay Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ellomay Capital and Clearway 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 Clearway Energy Class are associated (or correlated) with Ellomay Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ellomay Capital has no effect on the direction of Clearway Energy i.e., Clearway Energy and Ellomay Capital go up and down completely randomly.

Pair Corralation between Clearway Energy and Ellomay Capital

Given the investment horizon of 90 days Clearway Energy Class is expected to generate 0.56 times more return on investment than Ellomay Capital. However, Clearway Energy Class is 1.78 times less risky than Ellomay Capital. It trades about 0.17 of its potential returns per unit of risk. Ellomay Capital is currently generating about 0.0 per unit of risk. If you would invest  2,575  in Clearway Energy Class on December 30, 2024 and sell it today you would earn a total of  442.00  from holding Clearway Energy Class or generate 17.17% return on investment over 90 days.

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

Clearway Energy Class  vs.  Ellomay Capital

Clearway Energy Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearway Energy Class are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Clearway Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Ellomay Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ellomay Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Ellomay Capital is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Clearway Energy and Ellomay Capital

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

The idea behind Clearway Energy Class and Ellomay Capital 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.