Correlation Between Brookfield Renewable and Enlight Renewable

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

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

Diversification Opportunities for Brookfield Renewable and Enlight Renewable

-0.32

Correlation Coefficient

Brookfield Renewable  Enlight Renewable

Very good diversification

The 3 months correlation between Brookfield and Enlight is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Partners and Enlight Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enlight Renewable Energy and Brookfield Renewable 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 Brookfield Renewable Partners are associated (or correlated) with Enlight Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enlight Renewable Energy has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and Enlight Renewable go up and down completely randomly.

Pair Corralation between Brookfield Renewable and Enlight Renewable

Assuming the 90 days trading horizon Brookfield Renewable Partners is expected to under-perform the Enlight Renewable. But the preferred stock apears to be less risky and, when comparing its historical volatility, Brookfield Renewable Partners is 1.63 times less risky than Enlight Renewable. The preferred stock trades about -0.06 of its potential returns per unit of risk. The Enlight Renewable Energy is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,572  in Enlight Renewable Energy on September 16, 2024 and sell it today you would earn a total of  23.00  from holding Enlight Renewable Energy or generate 1.46% return on investment over 90 days.

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

Brookfield Renewable Partners  vs.  Enlight Renewable Energy

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. Despite somewhat strong basic indicators, Brookfield Renewable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Enlight Renewable Energy

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Enlight Renewable Energy are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Enlight Renewable is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Brookfield Renewable and Enlight Renewable

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

The idea behind Brookfield Renewable Partners and Enlight Renewable Energy 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.