Correlation Between Alternus Energy and Brookfield Renewable

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

Diversification Opportunities for Alternus Energy and Brookfield Renewable

0.0

Correlation Coefficient

Alternus Energy  Brookfield Renewable

Pay attention - limited upside

The 3 months correlation between Alternus and Brookfield is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alternus Energy Group and Brookfield Renewable Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable Corp and Alternus 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 Alternus Energy Group 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 Corp has no effect on the direction of Alternus Energy i.e., Alternus Energy and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Alternus Energy and Brookfield Renewable

If you would invest  2,821  in Brookfield Renewable Corp on September 4, 2024 and sell it today you would earn a total of  361.00  from holding Brookfield Renewable Corp or generate 12.8% return on investment over 90 days.

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

Alternus Energy Group  vs.  Brookfield Renewable Corp

Alternus Energy Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Brookfield Renewable Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Brookfield Renewable exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alternus Energy and Brookfield Renewable

The main advantage of trading using opposite Alternus Energy and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alternus 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 Alternus Energy Group and Brookfield Renewable Corp 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.