Correlation Between Polaris Infrastructure and Brookfield Renewable

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

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

Diversification Opportunities for Polaris Infrastructure and Brookfield Renewable

0.84

Correlation Coefficient

Polaris Infrastructure  Brookfield Renewable

Very poor diversification

The 3 months correlation between Polaris and Brookfield is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Polaris Infrastructure and Brookfield Renewable Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookfield Renewable and Polaris Infrastructure 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 Polaris Infrastructure 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 Polaris Infrastructure i.e., Polaris Infrastructure and Brookfield Renewable go up and down completely randomly.

Pair Corralation between Polaris Infrastructure and Brookfield Renewable

Assuming the 90 days trading horizon Polaris Infrastructure is expected to generate 2.89 times less return on investment than Brookfield Renewable. But when comparing it to its historical volatility, Polaris Infrastructure is 1.63 times less risky than Brookfield Renewable. It trades about 0.11 of its potential returns per unit of risk. Brookfield Renewable Partners is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,948  in Brookfield Renewable Partners on April 21, 2025 and sell it today you would earn a total of  784.00  from holding Brookfield Renewable Partners or generate 26.59% return on investment over 90 days.

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

Polaris Infrastructure  vs.  Brookfield Renewable Partners

Polaris Infrastructure

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polaris Infrastructure are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Polaris Infrastructure may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Brookfield Renewable

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brookfield Renewable Partners are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Brookfield Renewable sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Polaris Infrastructure and Brookfield Renewable

The main advantage of trading using opposite Polaris Infrastructure and Brookfield Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Polaris Infrastructure 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.

The idea behind Polaris Infrastructure and Brookfield Renewable Partners 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.