Correlation Between Capital Power and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Capital Power 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 Capital Power and Innergex Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Power and Innergex Renewable Energy, you can compare the effects of market volatilities on Capital Power 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 Capital Power with a short position of Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Power and Innergex Renewable.
Diversification Opportunities for Capital Power and Innergex Renewable
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Innergex is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Capital Power 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 Capital 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 Capital Power 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 Capital Power i.e., Capital Power and Innergex Renewable go up and down completely randomly.
Pair Corralation between Capital Power and Innergex Renewable
Assuming the 90 days trading horizon Capital Power is expected to under-perform the Innergex Renewable. In addition to that, Capital Power is 1.71 times more volatile than Innergex Renewable Energy. It trades about -0.17 of its total potential returns per unit of risk. Innergex Renewable Energy is currently generating about -0.21 per unit of volatility. If you would invest 819.00 in Innergex Renewable Energy on November 4, 2024 and sell it today you would lose (91.00) from holding Innergex Renewable Energy or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Power vs. Innergex Renewable Energy
Performance |
| Timeline |
| Capital Power |
| Innergex Renewable Energy |
Capital Power and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Power and Innergex Renewable
The main advantage of trading using opposite Capital Power and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Power 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.| Capital Power vs. Canadian Utilities Limited | Capital Power vs. Emera Inc | Capital Power vs. Keyera Corp | Capital Power vs. Northland Power |
| Innergex Renewable vs. Boralex | Innergex Renewable vs. Northland Power | Innergex Renewable vs. Capital Power | Innergex Renewable vs. Brookfield Renewable Partners |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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