Correlation Between Fluence Energy and Brookfield Renewable

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

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

Diversification Opportunities for Fluence Energy and Brookfield Renewable

-0.45

Correlation Coefficient

Fluence Energy  Brookfield Renewable

Very good diversification

The 3 months correlation between Fluence and Brookfield is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Fluence Energy and Brookfield Renewable Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable Corp and Fluence 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 Fluence Energy are associated (or correlated) with Brookfield Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookfield Renewable Corp has no effect on the direction of Fluence Energy i.e., Fluence Energy and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Fluence Energy and Brookfield Renewable

Given the investment horizon of 90 days Fluence Energy is expected to under-perform the Brookfield Renewable. In addition to that, Fluence Energy is 3.41 times more volatile than Brookfield Renewable Corp. It trades about -0.22 of its total potential returns per unit of risk. Brookfield Renewable Corp is currently generating about 0.02 per unit of volatility. If you would invest  2,769  in Brookfield Renewable Corp on December 30, 2024 and sell it today you would earn a total of  27.00  from holding Brookfield Renewable Corp or generate 0.98% return on investment over 90 days.

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

Fluence Energy  vs.  Brookfield Renewable Corp

Fluence Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fluence Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Brookfield Renewable Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Brookfield Renewable is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Fluence Energy and Brookfield Renewable

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

The idea behind Fluence Energy and Brookfield Renewable Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.