Correlation Between Enlight Renewable and Boralex

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

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

Diversification Opportunities for Enlight Renewable and Boralex

-0.25

Correlation Coefficient

Enlight Renewable  Boralex

Very good diversification

The 3 months correlation between Enlight and Boralex is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Enlight Renewable Energy and Boralex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boralex and Enlight 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 Enlight Renewable Energy are associated (or correlated) with Boralex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boralex has no effect on the direction of Enlight Renewable i.e., Enlight Renewable and Boralex go up and down completely randomly.

Pair Corralation between Enlight Renewable and Boralex

Given the investment horizon of 90 days Enlight Renewable Energy is expected to generate 23.97 times more return on investment than Boralex. However, Enlight Renewable is 23.97 times more volatile than Boralex. It trades about 0.07 of its potential returns per unit of risk. Boralex is currently generating about -0.01 per unit of risk. If you would invest  196.00  in Enlight Renewable Energy on September 4, 2024 and sell it today you would earn a total of  1,438  from holding Enlight Renewable Energy or generate 733.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.71%
Values	Daily Returns

Enlight Renewable Energy  vs.  Boralex

Enlight Renewable Energy

Risk-Adjusted Performance

1 of 100

Very 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Boralex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Boralex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Enlight Renewable and Boralex

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

The idea behind Enlight Renewable Energy and Boralex 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.