Correlation Between Renew Energy and Atlantica Sustainable

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

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

Diversification Opportunities for Renew Energy and Atlantica Sustainable

-0.35

Correlation Coefficient

Renew Energy  Atlantica Sustainable

Very good diversification

The 3 months correlation between Renew and Atlantica is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Renew Energy Global and Atlantica Sustainable Infrastr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlantica Sustainable and Renew 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 Renew Energy Global are associated (or correlated) with Atlantica Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlantica Sustainable has no effect on the direction of Renew Energy i.e., Renew Energy and Atlantica Sustainable go up and down completely randomly.

Pair Corralation between Renew Energy and Atlantica Sustainable

Considering the 90-day investment horizon Renew Energy Global is expected to generate 17.11 times more return on investment than Atlantica Sustainable. However, Renew Energy is 17.11 times more volatile than Atlantica Sustainable Infrastructure. It trades about 0.06 of its potential returns per unit of risk. Atlantica Sustainable Infrastructure is currently generating about 0.2 per unit of risk. If you would invest  569.00  in Renew Energy Global on September 3, 2024 and sell it today you would earn a total of  34.00  from holding Renew Energy Global or generate 5.98% return on investment over 90 days.

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

Renew Energy Global  vs.  Atlantica Sustainable Infrastr

Renew Energy Global

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Renew Energy Global are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Renew Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Atlantica Sustainable

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Atlantica Sustainable Infrastructure are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Atlantica Sustainable is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Renew Energy and Atlantica Sustainable

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

The idea behind Renew Energy Global and Atlantica Sustainable Infrastructure 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.