Correlation Between CGN Power and Northland Power
Can any of the company-specific risk be diversified away by investing in both CGN Power and Northland Power 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 CGN Power and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CGN Power Co and Northland Power, you can compare the effects of market volatilities on CGN Power and Northland Power 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 CGN Power with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGN Power and Northland Power.
Diversification Opportunities for CGN Power and Northland Power
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CGN and Northland is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding CGN Power Co and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and CGN 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 CGN Power Co are associated (or correlated) with Northland Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northland Power has no effect on the direction of CGN Power i.e., CGN Power and Northland Power go up and down completely randomly.
Pair Corralation between CGN Power and Northland Power
Assuming the 90 days horizon CGN Power Co is expected to generate 4.93 times more return on investment than Northland Power. However, CGN Power is 4.93 times more volatile than Northland Power. It trades about 0.08 of its potential returns per unit of risk. Northland Power is currently generating about 0.0 per unit of risk. If you would invest 14.00 in CGN Power Co on September 14, 2024 and sell it today you would earn a total of 14.00 from holding CGN Power Co or generate 100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CGN Power Co vs. Northland Power
Performance |
| Timeline |
| CGN Power |
| Northland Power |
CGN Power and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CGN Power and Northland Power
The main advantage of trading using opposite CGN Power and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CGN Power position performs unexpectedly, Northland Power 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 Northland Power will offset losses from the drop in Northland Power's long position.| CGN Power vs. Merit Medical Systems | CGN Power vs. ON SEMICONDUCTOR | CGN Power vs. TOREX SEMICONDUCTOR LTD | CGN Power vs. CVR Medical Corp |
| Northland Power vs. Dairy Farm International | Northland Power vs. SIEM OFFSHORE NEW | Northland Power vs. Martin Marietta Materials | Northland Power vs. Rayonier Advanced Materials |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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