Correlation Between ReNew Energy and Clearway Energy
Can any of the company-specific risk be diversified away by investing in both ReNew Energy 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 ReNew Energy and Clearway Energy 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 Clearway Energy Class, you can compare the effects of market volatilities on ReNew Energy 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 ReNew Energy with a short position of Clearway Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ReNew Energy and Clearway Energy.
Diversification Opportunities for ReNew Energy and Clearway Energy
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ReNew and Clearway is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ReNew Energy Global 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 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 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 ReNew Energy i.e., ReNew Energy and Clearway Energy go up and down completely randomly.
Pair Corralation between ReNew Energy and Clearway Energy
Assuming the 90 days horizon ReNew Energy Global is expected to generate 4.81 times more return on investment than Clearway Energy. However, ReNew Energy is 4.81 times more volatile than Clearway Energy Class. It trades about 0.02 of its potential returns per unit of risk. Clearway Energy Class is currently generating about 0.01 per unit of risk. If you would invest 78.00 in ReNew Energy Global on September 6, 2024 and sell it today you would lose (50.00) from holding ReNew Energy Global or give up 64.1% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 99.8% |
Values | Daily Returns |
ReNew Energy Global vs. Clearway Energy Class
Performance |
Timeline |
ReNew Energy Global |
Clearway Energy Class |
ReNew Energy and Clearway Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ReNew Energy and Clearway Energy
The main advantage of trading using opposite ReNew Energy and Clearway Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ReNew Energy 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.ReNew Energy vs. Renew Energy Global | ReNew Energy vs. Xos Equity Warrants | ReNew Energy vs. Microvast Holdings | ReNew Energy vs. AEye Inc |
Clearway Energy vs. Atlantica Sustainable Infrastructure | Clearway Energy vs. Verde Clean Fuels | Clearway Energy vs. ReNew Energy Global | Clearway Energy vs. Ellomay Capital |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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