Correlation Between Eco Wave and Clearway Energy

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

Diversification Opportunities for Eco Wave and Clearway Energy

-0.52

Correlation Coefficient

Eco Wave  Clearway Energy

Excellent diversification

The 3 months correlation between Eco and Clearway is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Eco Wave Power 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 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 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 Eco Wave i.e., Eco Wave and Clearway Energy go up and down completely randomly.

Pair Corralation between Eco Wave and Clearway Energy

Given the investment horizon of 90 days Eco Wave Power is expected to under-perform the Clearway Energy. In addition to that, Eco Wave is 3.75 times more volatile than Clearway Energy Class. It trades about -0.15 of its total potential returns per unit of risk. Clearway Energy Class is currently generating about 0.17 per unit of volatility. If you would invest  2,575  in Clearway Energy Class on December 28, 2024 and sell it today you would earn a total of  442.00  from holding Clearway Energy Class or generate 17.17% return on investment over 90 days.

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

Eco Wave Power  vs.  Clearway Energy Class

Eco Wave Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco Wave Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile 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.

Clearway Energy Class

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Clearway Energy Class are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady technical and fundamental indicators, Clearway Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eco Wave and Clearway Energy

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

The idea behind Eco Wave Power and Clearway Energy Class 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.