Correlation Between ReNew Energy and Exelon

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

Diversification Opportunities for ReNew Energy and Exelon

0.22

Correlation Coefficient

ReNew Energy  Exelon

Modest diversification

The 3 months correlation between ReNew and Exelon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ReNew Energy Global and Exelon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelon 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 Exelon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelon has no effect on the direction of ReNew Energy i.e., ReNew Energy and Exelon go up and down completely randomly.

Pair Corralation between ReNew Energy and Exelon

Assuming the 90 days horizon ReNew Energy Global is expected to generate 10.24 times more return on investment than Exelon. However, ReNew Energy is 10.24 times more volatile than Exelon. It trades about 0.13 of its potential returns per unit of risk. Exelon is currently generating about -0.01 per unit of risk. If you would invest  38.00  in ReNew Energy Global on March 13, 2024 and sell it today you would earn a total of  27.01  from holding ReNew Energy Global or generate 71.08% return on investment over 90 days.

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

ReNew Energy Global  vs.  Exelon

ReNew Energy Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ReNew Energy Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, ReNew Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Exelon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exelon has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Exelon is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ReNew Energy and Exelon

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

The idea behind ReNew Energy Global and Exelon 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..