Correlation Between Renew Energy and Brookfield Renewable

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

Diversification Opportunities for Renew Energy and Brookfield Renewable

-0.31

Correlation Coefficient

Renew Energy  Brookfield Renewable

Very good diversification

The 3 months correlation between Renew and Brookfield is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Renew Energy Global and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Renew 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 Renew Energy Global 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 has no effect on the direction of Renew Energy i.e., Renew Energy and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Renew Energy and Brookfield Renewable

Considering the 90-day investment horizon Renew Energy Global is expected to under-perform the Brookfield Renewable. But the stock apears to be less risky and, when comparing its historical volatility, Renew Energy Global is 1.13 times less risky than Brookfield Renewable. The stock trades about -0.12 of its potential returns per unit of risk. The Brookfield Renewable Partners is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,257  in Brookfield Renewable Partners on December 30, 2024 and sell it today you would lose (32.00) from holding Brookfield Renewable Partners or give up 1.42% of portfolio value over 90 days.

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

Renew Energy Global  vs.  Brookfield Renewable Partners

Renew Energy Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Renew Energy Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Brookfield Renewable

Risk-Adjusted Performance

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 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.

Pair Trading with Renew Energy and Brookfield Renewable

The main advantage of trading using opposite Renew Energy and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Renew 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 Renew Energy Global and Brookfield Renewable Partners 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.