Correlation Between Brookfield Renewable and AES

Can any of the company-specific risk be diversified away by investing in both Brookfield Renewable and AES 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 AES 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 The AES, you can compare the effects of market volatilities on Brookfield Renewable and AES 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 AES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brookfield Renewable and AES.

Diversification Opportunities for Brookfield Renewable and AES

0.7

Correlation Coefficient

Brookfield Renewable  AES

Poor diversification

The 3 months correlation between Brookfield and AES is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Brookfield Renewable Corp and The AES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AES 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 AES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AES has no effect on the direction of Brookfield Renewable i.e., Brookfield Renewable and AES go up and down completely randomly.

Pair Corralation between Brookfield Renewable and AES

Assuming the 90 days trading horizon Brookfield Renewable Corp is expected to generate 0.7 times more return on investment than AES. However, Brookfield Renewable Corp is 1.44 times less risky than AES. It trades about 0.21 of its potential returns per unit of risk. The AES is currently generating about 0.05 per unit of risk. If you would invest  4,535  in Brookfield Renewable Corp on September 2, 2025 and sell it today you would earn a total of  1,273  from holding Brookfield Renewable Corp or generate 28.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Brookfield Renewable Corp  vs.  The AES

Brookfield Renewable Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Brookfield Renewable displayed solid returns over the last few months and may actually be approaching a breakup point.

AES

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in The AES are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, AES may actually be approaching a critical reversion point that can send shares even higher in January 2026.

Pair Trading with Brookfield Renewable and AES

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

The idea behind Brookfield Renewable Corp and The AES 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.