Correlation Between Northland Power and Power Assets
Can any of the company-specific risk be diversified away by investing in both Northland Power and Power Assets 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 Northland Power and Power Assets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northland Power and Power Assets Holdings, you can compare the effects of market volatilities on Northland Power and Power Assets 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 Northland Power with a short position of Power Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northland Power and Power Assets.
Diversification Opportunities for Northland Power and Power Assets
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Northland and Power is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Northland Power and Power Assets Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Assets Holdings and Northland Power 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 Northland Power are associated (or correlated) with Power Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Assets Holdings has no effect on the direction of Northland Power i.e., Northland Power and Power Assets go up and down completely randomly.
Pair Corralation between Northland Power and Power Assets
Assuming the 90 days horizon Northland Power is expected to under-perform the Power Assets. But the stock apears to be less risky and, when comparing its historical volatility, Northland Power is 1.29 times less risky than Power Assets. The stock trades about -0.02 of its potential returns per unit of risk. The Power Assets Holdings is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 146.00 in Power Assets Holdings on December 4, 2024 and sell it today you would earn a total of 499.00 from holding Power Assets Holdings or generate 341.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northland Power vs. Power Assets Holdings
Performance |
| Timeline |
| Northland Power |
| Power Assets Holdings |
Northland Power and Power Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northland Power and Power Assets
The main advantage of trading using opposite Northland Power and Power Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northland Power position performs unexpectedly, Power Assets 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 Power Assets will offset losses from the drop in Power Assets' long position.| Northland Power vs. Gol Intelligent Airlines | Northland Power vs. Singapore Airlines Limited | Northland Power vs. RCS Mediagroup SpA | Northland Power vs. PROSIEBENSAT1 MEDIADR4 |
| Power Assets vs. COREBRIDGE FINANCIAL INC | Power Assets vs. MOVIE GAMES SA | Power Assets vs. GEAR4MUSIC LS 10 | Power Assets vs. Micron Technology |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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