Correlation Between Caribbean Utilities and Innergex Renewable
Can any of the company-specific risk be diversified away by investing in both Caribbean Utilities 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 Caribbean Utilities and Innergex Renewable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caribbean Utilities and Innergex Renewable Energy, you can compare the effects of market volatilities on Caribbean Utilities 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 Caribbean Utilities with a short position of Innergex Renewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribbean Utilities and Innergex Renewable.
Diversification Opportunities for Caribbean Utilities and Innergex Renewable
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caribbean and Innergex is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Caribbean Utilities 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 Caribbean Utilities 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 Caribbean Utilities 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 Caribbean Utilities i.e., Caribbean Utilities and Innergex Renewable go up and down completely randomly.
Pair Corralation between Caribbean Utilities and Innergex Renewable
Assuming the 90 days trading horizon Caribbean Utilities is expected to generate 1.63 times more return on investment than Innergex Renewable. However, Caribbean Utilities is 1.63 times more volatile than Innergex Renewable Energy. It trades about 0.02 of its potential returns per unit of risk. Innergex Renewable Energy is currently generating about -0.04 per unit of risk. If you would invest 1,268 in Caribbean Utilities on August 30, 2024 and sell it today you would earn a total of 132.00 from holding Caribbean Utilities or generate 10.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.94% |
| Values | Daily Returns |
Caribbean Utilities vs. Innergex Renewable Energy
Performance |
| Timeline |
| Caribbean Utilities |
| Innergex Renewable Energy |
Caribbean Utilities and Innergex Renewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caribbean Utilities and Innergex Renewable
The main advantage of trading using opposite Caribbean Utilities and Innergex Renewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribbean Utilities 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.| Caribbean Utilities vs. Innergex Renewable Energy | Caribbean Utilities vs. Northland Power | Caribbean Utilities vs. Capital Power | Caribbean Utilities vs. Brookfield Renewable Partners |
| 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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