Correlation Between Eco Wave and Brookfield Renewable

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

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

Diversification Opportunities for Eco Wave and Brookfield Renewable

-0.68

Correlation Coefficient

Eco Wave  Brookfield Renewable

Excellent diversification

The 3 months correlation between Eco and Brookfield is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Eco Wave Power and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Eco Wave 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 Eco Wave Power 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 Eco Wave i.e., Eco Wave and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Eco Wave and Brookfield Renewable

Given the investment horizon of 90 days Eco Wave Power is expected to generate 5.43 times more return on investment than Brookfield Renewable. However, Eco Wave is 5.43 times more volatile than Brookfield Renewable Partners. It trades about 0.28 of its potential returns per unit of risk. Brookfield Renewable Partners is currently generating about -0.24 per unit of risk. If you would invest  899.00  in Eco Wave Power on September 21, 2024 and sell it today you would earn a total of  495.00  from holding Eco Wave Power or generate 55.06% return on investment over 90 days.

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

Eco Wave Power  vs.  Brookfield Renewable Partners

Eco Wave Power

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eco Wave Power are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Eco Wave exhibited solid returns over the last few months and may actually be approaching a breakup point.

Brookfield Renewable

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Eco Wave and Brookfield Renewable

The main advantage of trading using opposite Eco Wave and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eco Wave 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 Eco Wave Power 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.