Correlation Between Consumers Energy and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Consumers Energy and Innergex 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 Consumers Energy and Innergex Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consumers Energy and Innergex Renewable Energy, you can compare the effects of market volatilities on Consumers Energy and Innergex 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 Consumers Energy with a short position of Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consumers Energy and Innergex Renewable.
Diversification Opportunities for Consumers Energy and Innergex Renewable
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Consumers and Innergex is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Consumers Energy and Innergex Renewable Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innergex Renewable Energy and Consumers 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 Consumers Energy are associated (or correlated) with Innergex Renewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innergex Renewable Energy has no effect on the direction of Consumers Energy i.e., Consumers Energy and Innergex Renewable go up and down completely randomly.
Pair Corralation between Consumers Energy and Innergex Renewable
Assuming the 90 days trading horizon Consumers Energy is expected to generate 0.49 times more return on investment than Innergex Renewable. However, Consumers Energy is 2.04 times less risky than Innergex Renewable. It trades about 0.0 of its potential returns per unit of risk. Innergex Renewable Energy is currently generating about -0.02 per unit of risk. If you would invest 8,542 in Consumers Energy on August 31, 2024 and sell it today you would lose (362.00) from holding Consumers Energy or give up 4.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.33% |
| Values | Daily Returns |
Consumers Energy vs. Innergex Renewable Energy
Performance |
| Timeline |
| Consumers Energy |
| Innergex Renewable Energy |
Consumers Energy and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consumers Energy and Innergex Renewable
The main advantage of trading using opposite Consumers Energy and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consumers Energy position performs unexpectedly, Innergex 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 Innergex Renewable will offset losses from the drop in Innergex Renewable's long position.| Consumers Energy vs. Nextera Energy | Consumers Energy vs. Duke Energy | Consumers Energy vs. PGE Corp | Consumers Energy vs. Southern Company |
| Innergex Renewable vs. Nextera Energy | Innergex Renewable vs. Consumers Energy | Innergex Renewable vs. Duke Energy | Innergex Renewable vs. Centrais Electricas Brasileiras |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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