Correlation Between Enlight Renewable and Clearway Energy

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

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

Diversification Opportunities for Enlight Renewable and Clearway Energy

-0.09

Correlation Coefficient

Enlight Renewable  Clearway Energy

Good diversification

The 3 months correlation between Enlight and Clearway is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Clearway Energy Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clearway Energy Class and Enlight 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 Enlight Renewable Energy are associated (or correlated) with Clearway Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clearway Energy Class has no effect on the direction of Enlight Renewable i.e., Enlight Renewable and Clearway Energy go up and down completely randomly.

Pair Corralation between Enlight Renewable and Clearway Energy

Given the investment horizon of 90 days Enlight Renewable Energy is expected to under-perform the Clearway Energy. In addition to that, Enlight Renewable is 1.39 times more volatile than Clearway Energy Class. It trades about -0.05 of its total potential returns per unit of risk. Clearway Energy Class is currently generating about 0.17 per unit of volatility. 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	Insignificant
Accuracy	100.0%
Values	Daily Returns

Enlight Renewable Energy  vs.  Clearway Energy Class

Enlight Renewable Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enlight Renewable Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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.

Pair Trading with Enlight Renewable and Clearway Energy

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

The idea behind Enlight Renewable Energy and Clearway Energy Class 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.