Correlation Between TransAlta Renewables and Renew Energy

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

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

Diversification Opportunities for TransAlta Renewables and Renew Energy

0.0

Correlation Coefficient

TransAlta Renewables  Renew Energy

Pay attention - limited upside

The 3 months correlation between TransAlta and Renew is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TransAlta Renewables and Renew Energy Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renew Energy Global and TransAlta Renewables 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 TransAlta Renewables are associated (or correlated) with Renew Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renew Energy Global has no effect on the direction of TransAlta Renewables i.e., TransAlta Renewables and Renew Energy go up and down completely randomly.

Pair Corralation between TransAlta Renewables and Renew Energy

If you would invest  614.00  in Renew Energy Global on December 5, 2024 and sell it today you would earn a total of  7.00  from holding Renew Energy Global or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

TransAlta Renewables  vs.  Renew Energy Global

TransAlta Renewables

Risk-Adjusted Performance

Very Weak

Over the last 90 days TransAlta Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TransAlta Renewables is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Renew Energy Global

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Renew Energy Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Renew Energy is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with TransAlta Renewables and Renew Energy

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

The idea behind TransAlta Renewables and Renew Energy Global 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.