Correlation Between Brookfield Renewable and Energy Vault

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

By analyzing existing cross correlation between Brookfield Renewable Corp and Energy Vault Holdings, you can compare the effects of market volatilities on Brookfield Renewable and Energy Vault 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 Energy Vault. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and Energy Vault.

Diversification Opportunities for Brookfield Renewable and Energy Vault

0.3

Correlation Coefficient

Brookfield Renewable  Energy Vault

Weak diversification

The 3 months correlation between Brookfield and Energy is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Corp and Energy Vault Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Vault Holdings 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 Corp are associated (or correlated) with Energy Vault. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Vault Holdings has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and Energy Vault go up and down completely randomly.

Pair Corralation between Brookfield Renewable and Energy Vault

Given the investment horizon of 90 days Brookfield Renewable is expected to generate 3.62 times less return on investment than Energy Vault. But when comparing it to its historical volatility, Brookfield Renewable Corp is 3.2 times less risky than Energy Vault. It trades about 0.02 of its potential returns per unit of risk. Energy Vault Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  236.00  in Energy Vault Holdings on September 11, 2024 and sell it today you would lose (59.00) from holding Energy Vault Holdings or give up 25.0% of portfolio value over 90 days.

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

Brookfield Renewable Corp  vs.  Energy Vault Holdings

Brookfield Renewable Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Brookfield Renewable is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Energy Vault Holdings

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Brookfield Renewable and Energy Vault

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

The idea behind Brookfield Renewable Corp and Energy Vault Holdings 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.