Correlation Between Element Fleet and Brookfield Renewable

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

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

Diversification Opportunities for Element Fleet and Brookfield Renewable

0.59

Correlation Coefficient

Element Fleet  Brookfield Renewable

Very weak diversification

The 3 months correlation between Element and Brookfield is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Brookfield Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Element Fleet 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 Element Fleet Management 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 Element Fleet i.e., Element Fleet and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Element Fleet and Brookfield Renewable

Assuming the 90 days trading horizon Element Fleet is expected to generate 1.46 times less return on investment than Brookfield Renewable. In addition to that, Element Fleet is 2.2 times more volatile than Brookfield Renewable Energy. It trades about 0.04 of its total potential returns per unit of risk. Brookfield Renewable Energy is currently generating about 0.13 per unit of volatility. If you would invest  2,385  in Brookfield Renewable Energy on September 14, 2024 and sell it today you would earn a total of  110.00  from holding Brookfield Renewable Energy or generate 4.61% return on investment over 90 days.

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

Element Fleet Management  vs.  Brookfield Renewable Energy

Element Fleet Management

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Element Fleet Management are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Element Fleet is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Brookfield Renewable

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Brookfield Renewable is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Element Fleet and Brookfield Renewable

The main advantage of trading using opposite Element Fleet and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet 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 Element Fleet Management and Brookfield 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 CEOs Directory module to screen CEOs from public companies around the world.