Correlation Between Ellomay Capital and Northland Power
Can any of the company-specific risk be diversified away by investing in both Ellomay Capital 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 Ellomay Capital and Northland Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ellomay Capital and Northland Power, you can compare the effects of market volatilities on Ellomay Capital 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 Ellomay Capital with a short position of Northland Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ellomay Capital and Northland Power.
Diversification Opportunities for Ellomay Capital and Northland Power
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Ellomay and Northland is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ellomay Capital and Northland Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northland Power and Ellomay Capital 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 Ellomay Capital 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 Ellomay Capital i.e., Ellomay Capital and Northland Power go up and down completely randomly.
Pair Corralation between Ellomay Capital and Northland Power
Given the investment horizon of 90 days Ellomay Capital is expected to generate 1.15 times more return on investment than Northland Power. However, Ellomay Capital is 1.15 times more volatile than Northland Power. It trades about 0.0 of its potential returns per unit of risk. Northland Power is currently generating about -0.04 per unit of risk. If you would invest 1,635 in Ellomay Capital on October 26, 2024 and sell it today you would lose (6.00) from holding Ellomay Capital or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ellomay Capital vs. Northland Power
Performance |
| Timeline |
| Ellomay Capital |
| Northland Power |
Ellomay Capital and Northland Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ellomay Capital and Northland Power
The main advantage of trading using opposite Ellomay Capital and Northland Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ellomay Capital 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.| Ellomay Capital vs. Enlight Renewable Energy | Ellomay Capital vs. Renew Energy Global | Ellomay Capital vs. Clearway Energy Class | Ellomay Capital vs. Excelerate Energy |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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