Correlation Between FuelCell Energy and Brookfield Renewable
Can any of the company-specific risk be diversified away by investing in both FuelCell Energy 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 FuelCell Energy and Brookfield Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FuelCell Energy and Brookfield Renewable Partners, you can compare the effects of market volatilities on FuelCell Energy 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 FuelCell Energy with a short position of Brookfield Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of FuelCell Energy and Brookfield Renewable.
Diversification Opportunities for FuelCell Energy and Brookfield Renewable
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FuelCell and Brookfield is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding FuelCell Energy and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and FuelCell 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 FuelCell Energy 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 FuelCell Energy i.e., FuelCell Energy and Brookfield Renewable go up and down completely randomly.
Pair Corralation between FuelCell Energy and Brookfield Renewable
Given the investment horizon of 90 days FuelCell Energy is expected to under-perform the Brookfield Renewable. In addition to that, FuelCell Energy is 2.8 times more volatile than Brookfield Renewable Partners. It trades about -0.2 of its total potential returns per unit of risk. Brookfield Renewable Partners is currently generating about -0.19 per unit of volatility. If you would invest 2,312 in Brookfield Renewable Partners on January 31, 2024 and sell it today you would lose (174.00) from holding Brookfield Renewable Partners or give up 7.53% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
FuelCell Energy vs. Brookfield Renewable Partners
Performance |
Timeline |
FuelCell Energy |
Brookfield Renewable |
FuelCell Energy and Brookfield Renewable Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FuelCell Energy and Brookfield Renewable
The main advantage of trading using opposite FuelCell Energy and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FuelCell Energy 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.FuelCell Energy vs. Kimball Electronics | FuelCell Energy vs. Hollysys Automation Technologies | FuelCell Energy vs. Hayward Holdings | FuelCell Energy vs. Energizer Holdings |
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Check out your portfolio center.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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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