Correlation Between Clearway Energy and Northland Power
Can any of the company-specific risk be diversified away by investing in both Clearway Energy 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 Clearway Energy and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clearway Energy Class and Northland Power, you can compare the effects of market volatilities on Clearway Energy 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 Clearway Energy with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clearway Energy and Northland Power.
Diversification Opportunities for Clearway Energy and Northland Power
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Clearway and Northland is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Clearway Energy Class and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and Clearway 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 Clearway Energy Class 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 Clearway Energy i.e., Clearway Energy and Northland Power go up and down completely randomly.
Pair Corralation between Clearway Energy and Northland Power
Given the investment horizon of 90 days Clearway Energy Class is expected to generate 1.06 times more return on investment than Northland Power. However, Clearway Energy is 1.06 times more volatile than Northland Power. It trades about -0.03 of its potential returns per unit of risk. Northland Power is currently generating about -0.04 per unit of risk. If you would invest 2,631 in Clearway Energy Class on October 26, 2024 and sell it today you would lose (43.00) from holding Clearway Energy Class or give up 1.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clearway Energy Class vs. Northland Power
Performance |
| Timeline |
| Clearway Energy Class |
| Northland Power |
Clearway Energy and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clearway Energy and Northland Power
The main advantage of trading using opposite Clearway Energy and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clearway Energy 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.| Clearway Energy vs. Brookfield Renewable Corp | Clearway Energy vs. Clearway Energy | Clearway Energy vs. Nextera Energy Partners | Clearway Energy vs. Orsted AS ADR |
| Northland Power vs. Tidewater Renewables | Northland Power vs. Renew Energy Global | Northland Power vs. Clearway Energy | Northland Power 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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